Court Opinion

ID: 4331813
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:21:18.295113+00
Date Added: 2024-06-11T10:06:06.319482
License: Public Domain

110 T.C. No. 32

                    UNITED STATES TAX COURT

      ESTATE OF ROBERT W. QUICK, DECEASED, ESTHER P. QUICK,
  PERSONAL REPRESENTATIVE, AND ESTHER P. QUICK, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*

    Docket No. 8588-97.                       Filed June 29, 1998.

         Ps filed a Motion for Reconsideration of our
    Opinion reported as Estate of Quick v. Commissioner,
    110 T.C. 172 (1998). Among other things, Ps argue that
    our failure therein to order refunds for overpayments
    of tax for Ps' 1989 and 1990 tax years stemming from
    the "proper" computational adjustments which R should
    have made for those years, as well as refunds for
    overpayments for their 1987 and 1988 tax years
    attributable to NOL carrybacks from 1989 and 1990, was
    erroneous. Held: Ps' Motion for Reconsideration is
    denied; this Court has jurisdiction to determine
    overpayments of tax, if any, attributable to affected
    items as part of a decision of this case (sec.
    6512(b)(1), I.R.C.; Woody v. Commissioner, 95 T.C. 193,
    206, 209 (1990), followed); this Court lacks

     * This opinion supplements our previously filed Opinion in
Estate of Quick v. Commissioner, 110 T.C. 172 (1998).
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     jurisdiction to order credits or refunds of
     overpayments except with respect to overpayments
     determined by final decision as authorized by sec.
     6512(b)(2), I.R.C.

     Kevin M. Bagley and Mitchell B. Dubick, for petitioners.

     Gretchen A. Kindel, for respondent.

                       SUPPLEMENTAL OPINION

     NIMS, Judge:   In a timely filed Motion for Reconsideration

(Motion) pursuant to Rule 161, petitioners request the Court to

reconsider its Opinion reported as Estate of Quick v.

Commissioner, 110 T.C. 172 (1998).     The Opinion is incorporated

herein by this reference.

     Except where otherwise noted, all Rule references are to the

Tax Court Rules of Practice and Procedure.    All section

references are to sections of the Internal Revenue Code in effect

for the years in issue.

     In our Opinion, we held, among other things, that

respondent's recharacterization of petitioners' distributive

share of partnership losses for 1989 and 1990 as passive for

purposes of section 469 (the section 469 issue) constituted an

"affected item" within the meaning of section 6231(a)(5), and was

thereby subject to the Tax Equity and Fiscal Responsibility Act

of 1982 (TEFRA), Pub. L. 97-248, sec. 402(a), 96 Stat. 324, 648,
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codified at sections 6221 through 6233.   Estate of Quick v.

Commissioner, supra at 187-189.

     In their Motion, petitioners allege that our conclusion that

the section 469 issue is an affected item within the meaning of

section 6231(a)(5) and accompanying regulations is incorrect as a

matter of law.   Petitioner's Motion further alleges that, even if

the section 469 issue is an affected item, the Court nevertheless

should have ordered respondent to refund overpayments of taxes

paid for 1989 and 1990, as well as overpayments for 1987 and

1988, based on the "proper" computational adjustments to

petitioners' returns which respondent should have made after the

conclusion of the partnership level proceeding.   Lastly,

petitioners' Motion alleges that we inconsistently decided that

the section 469 issue constitutes an affected item for 1989 and

1990 but is not an affected item for 1987 and 1988.   Respondent

has filed an objection to petitioners' Motion, together with a

supporting memorandum of law.

     Reconsideration under Rule 161 serves the limited purpose of

correcting substantial errors of fact or law and allows the

introduction of newly discovered evidence that the moving party

could not have introduced, by the exercise of due diligence, in

the prior proceeding.   Westbrook v. Commissioner, 68 F.3d 868,

879-880 (5th Cir. 1995), affg. per curiam T.C. Memo. 1993-634;

see Lucky Stores, Inc. v. Commissioner, T.C. Memo. 1997-70;

Estate of Scanlan v. Commissioner, T.C. Memo. 1996-414.     The
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granting of a motion for reconsideration rests with the

discretion of the Court, and we usually do not exercise our

discretion absent a showing of unusual circumstances or

substantial error.    CWT Farms, Inc. v. Commissioner, 79 T.C.
1054, 1057 (1982), affd. 755 F.2d 790 (11th Cir. 1985).

Reconsideration is not the appropriate forum for rehashing

previously rejected legal arguments or tendering new legal

theories to reach the end result desired by the moving party.

Stoody v. Commissioner, 67 T.C. 643, 644 (1977); Estate of

Scanlan v. Commissioner, supra.

     Petitioners' argument that the section 469 issue cannot be

an affected item for purposes of the applicability of TEFRA's

audit and litigation provisions was raised previously and

received thorough consideration by this Court.     Estate of Quick

v. Commissioner, supra.    Petitioners' Motion does not evince any

unusual circumstances or substantial error with respect to this

issue.    We therefore decline to reconsider this issue or to

elaborate on it any further.    See Stoody v. Commissioner, supra

at 644.

     Petitioners next contend that, even if the section 469 issue

is an affected item requiring partner level factual

determinations, the Court erred in failing to order refunds for

overpayments of taxes paid for 1989 and 1990, as well as refunds

for overpayments for 1987 and 1988 resulting from net operating

loss carrybacks from 1989 and 1990.     In petitioners' view,
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respondent simply should have increased the amount of

petitioners' distributive share of partnership losses flowing

from the favorable adjustments at the partnership level for 1989

and 1990.   Instead, respondent recharacterized petitioners'

distributive share of the adjusted partnership losses (as well as

petitioners' share of partnership losses previously reported on

their returns for those years) as passive in notices of

computational adjustment issued for 1989 and 1990, resulting in

deficiencies.   However, as an affected item requiring partner

level factual determinations, the recharacterization of such

losses was not properly subject to computational adjustment.

Sec. 6230(a)(2)(A)(i); see Estate of Quick v. Commissioner,

supra.

     Respondent argues that this Court correctly declined to

order refunds for overpayments of tax in our Opinion.   We agree,

but for the sake of clarity, we deem it necessary to discuss our

rationale in greater detail than we did previously.

     The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress.   See sec. 7442; Judge v. Commissioner, 88 T.C. 1175,

1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529

(1985).   We have jurisdiction to decide whether we have

jurisdiction.   Pyo v. Commissioner, 83 T.C. 626, 632 (1984).
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     Our jurisdiction to determine overpayments of tax is

provided by section 6512(b).   Judge v. Commissioner, supra at

1182.   Section 6512(b) provides:

     (b) Overpayment Determined by Tax Court.--

          (1) Jurisdiction to determine.--Except as provided
     by paragraph (3) and by section 7463, if the Tax Court
     finds that there is no deficiency and further finds
     that the taxpayer has made an overpayment of income tax
     for the same taxable year * * * in respect of which the
     Secretary determined the deficiency, or finds that
     there is a deficiency but that the taxpayer has made an
     overpayment of such tax, the Tax Court shall have
     jurisdiction to determine the amount of such
     overpayment, and such amount shall, when the decision
     of the Tax Court has become final, be credited or
     refunded to the taxpayer.

Section 6512(b)(2) confers jurisdiction to order refunds of

overpayments determined by this Court "after 120 days after a

decision * * * has become final."

     Respondent, by virtue of having challenged petitioners'

characterization of their distributive share of adjusted

partnership losses for 1989 and 1990, has effectively transmuted

what otherwise would have been unquestionably a partnership item,

i.e., the amount of losses in petitioners' hands, into an

affected item requiring partner level factual determinations.

Sec. 6231(a)(3); sec. 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin.

Regs.   Having concluded that the section 469 issue is an affected

item subject to deficiency proceedings under section

6230(a)(2)(A)(i), it follows that we have jurisdiction to

determine any overpayments attributable thereto in this partner
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level proceeding.   See, e.g., Woody v. Commissioner, 95 T.C. 193,

206 (1990).   However, the determination of any overpayments must

be included as part of the decision in this case after a trial on

the merits.   See sec. 6512(b)(3); Estate of Quick v.

Commissioner, supra at 189.   Pursuant to section 6512(b)(1),

petitioners would be entitled to a credit or refund of any

overpayment that we may determine only when the decision becomes

final.   Further, pursuant to section 6512(b)(2), we may order the

refund of any overpayment included in a decision only if the

refund remains unpaid for 120 days after the date the decision

becomes final.

     In response to petitioners' argument, even if the

adjustments to the amounts of their distributive share of

partnership losses for 1989 and 1990 were somehow separable from

respondent's challenge to the characterization of those losses

under section 469, and were therefore subject to computational

adjustment, which they are not, we lack jurisdiction under

section 6512(b) to determine any overpayments of tax attributable

to computational items at any stage of this proceeding.     Woody v.

Commissioner, supra at 206.   It follows that we also lack the

authority to order the credit or refund of overpayments

attributable to such computational items.

     Lastly, petitioners' argument that the Court failed to treat

the section 469 issue consistently for all years before the Court

is unavailing.   We did not conclude that the characterization of
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petitioners' share of losses is an affected item for 1989 and

1990, but is not an affected item for 1987 and 1988.   Nor did we

state that whether or not an item is an affected item depends

solely on whether respondent "elects" to challenge it through an

affected items deficiency proceeding.   We simply held that "the

characterization of losses as either passive or nonpassive in the

hands of a partner is an affected item under section 469".

Estate of Quick v. Commissioner, supra at 188.

     Respondent did not challenge petitioners' characterization

of their proportionate share of partnership losses for 1987 and

1988, and thus the affected items deficiency procedures were not

required to be followed for those years.   Rather, adjustments to

the amounts of petitioners' distributive share of partnership

losses in those years were properly made by respondent pursuant

to notices of computational adjustment upon the conclusion of the

partnership level proceeding.   Sec. 6230(a)(1).   It is only

because respondent challenged the characterization of losses for

1989 and 1990, necessitating partner level factual

determinations, that affected items deficiency procedures apply

to those years.   Sec. 6230(a)(2)(A)(i).

     In sum, respondent cannot, as petitioners contend,

arbitrarily "elect" to make the section 469 issue an affected

item for certain years but not for others.   However, respondent

is free to challenge a taxpayer's characterization of his share

of partnership losses via the affected items deficiency
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proceedings in any year for which the period of limitations is

open.

     We have considered each of the remaining arguments of the

parties and to the extent that they are not discussed herein,

find them to be either not germane or unconvincing.

     For the above reasons,

                                      An appropriate order

                              denying petitioners' motion for

                              reconsideration will be issued.