resemble premium prepayments, which entitled Metrobank to insure the acquired deposits with the BIF in future years. This would support capitalizing the exit and entrance fees, even if they had no connection with the acquisition of a separate asset. See Herman v. Commissioner, 84 T.C. 120 (1985) (one-time purchase of subordinated loan certificate, which entitled physician, upon payment of annual premiums, to malpractice insurance coverage, held capital investment; Commissioner conceded deductibility of annual premiums).

The Cost Savings Argument Is Not Persuasive

The majority's final argument for deductibility is that cost savings expenditures, such as payments to escape from burdensome or onerous contracts, are generally deductible. See majority op. pp. 224-225. This principle may have been limited by the Supreme Court's opinion in INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 88-89 (1992) (identifying benefits of transformation from public to private company, such as avoidance of shareholder-relations expenses and administrative advantages of reducing the number of classes and shares of outstanding stock). Moreover, the majority's cost reduction analysis is defective; the case relied upon by the majority, T.J. Enters., Inc. v. Commissioner, 101 T.C. 581 (1993), is distinguishable. The payments in that case were made each year to reduce costs that otherwise would have been payable during each such year; the Court also noted that no separate and distinct additional asset was acquired by virtue of the payments sought to be deducted. See T.J. Enters., Inc. v. Commissioner, supra at 589 n.8, 592-593. By contrast, the fees in the case at hand entitled Metrobank to insure the acquired deposits with the BIF for many years to come (and, as noted above, the fees were connected with the acquisition itself).

Finally, we have held that a payment to terminate a burdensome contract may be capitalized if the payment is also integrally related to the acquisition of a new long-term contract with significant future benefits. See U.S. Bancorp & Consol. Subs. v. Commissioner, 111 T.C. 231 (1998). Even if one were to agree with the majority that the entrance and

if the regular premiums paid by Metrocorp on its own deposits were removed from consideration. They should be so removed if the much more meaningful comparison of the entrance and exit fees with the regular premiums on the acquired deposits is to be made.

exit fees were paid in order to terminate burdensome insurance premium obligations, the entrance and exit fees would still fall within the rubric of long-term benefits.

For all the foregoing reasons, I respectfully dissent.

RUWE, WHALEN, and GALE, JJ., agree with this dissenting opinion.

JAMES R. KENNEDY, PETITIONER v. COMMISSIONER

OF INTERNAL REVENUE, RESPONDENT

Docket No. 9544-00L.

Filed April 23, 2001.

On Sept. 10, 1999, R mailed to P a notice required by sec. 6320(a), I.R.C., concerning P's unpaid tax liabilities for the years 1984 through 1988. R concedes that such notice was not mailed to P at his last known address. On Oct. 25, 1999, R mailed to P a final notice of intent to levy concerning P's unpaid tax liabilities for the years 1984 through 1988. Although the notice of intent to levy was mailed to P at his last known address, P failed to file a request for an administrative hearing with the Internal Revenue Service Office of Appeals (Appeals Office) within the 30-day period prescribed in sec. 6330, I.R.C. Despite P's failure to file a timely request for an Appeals Office hearing, R granted P a so-called equivalent hearing. On Aug. 17, 2000, R issued a "decision letter" to P stating that R would proceed with collection by way of levy. On Sept. 11, 2000, P filed a petition for review with the Court. Held, insofar as the petition filed herein purports to be a petition for review of a notice of the filing of a notice of lien pursuant to sec. 6320, I.R.C., the Court lacks jurisdiction on the ground that R did not make a determination pursuant to that section because R failed to send the written notice prescribed by sec. 6320(a), I.R.C., to P at his last known address. Held, further, insofar as the petition filed herein purports to be a petition for review of a notice of intent to levy pursuant to sec. 6330(d), I.R.C., the Court lacks jurisdiction on the ground that R did not make a determination pursuant to sec. 6330, I.R.C., because P failed to file a timely request for an Appeals Office hearing under sec. 6330(a)(2) and (3)(B) and (b), I.R.C. Held, further, R's decision to conduct a so-called equivalent hearing did not result in a waiver by R of the time restrictions imposed on P for requesting an Appeals Office hearing pursuant to sec. 6330, I.R.C.

James R. Kennedy, pro se.

Susan Watson and Wendy S. Harris, for respondent.

OPINION

RUWE, Judge: This case was assigned to Special Trial Judge Robert N. Armen, Jr., pursuant to the provisions of section 7443A(b)(4) and Rules 180, 181, and 183.1 The Court agrees with and adopts the Opinion of the Special Trial Judge, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

ARMEN, Special Trial Judge: This matter is before the Court on respondent's motion to dismiss for lack of jurisdiction. Respondent contends that the Court lacks jurisdiction over the petition on the ground that respondent did not issue a determination letter to petitioner pursuant to section 6320 or 6330. As explained in detail below, insofar as petitioner seeks review of a notice of the filing of a notice of lien pursuant to section 6320, we will dismiss this case for lack of jurisdiction on the ground that respondent failed to mail the notice required by section 6320(a) to petitioner at his last known address and, therefore, petitioner had no opportunity to request an administrative hearing. Further, insofar as petitioner seeks review of a notice of intent to levy pursuant to section 6330, we will dismiss this case for lack of jurisdiction on the ground that petitioner failed to make a timely request for an administrative hearing and, therefore, respondent was not obliged to (and did not) issue a determination letter to petitioner.

Background

On or about September 10, 1999, respondent mailed to petitioner a Notice Of Federal Tax Lien Filing And Your Right To A Hearing Under IRC 6320 (the notice required by section 6320(a)) concerning petitioner's unpaid tax liabilities for the years 1984 through 1988.2 Respondent concedes that the notice required by section 6320(a) was not mailed to petitioner at his last known address and that such notice was therefore invalid. See sec. 6320(a)(2)(C). In any event, petitioner did not request an administrative hearing with the

1 Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

2 The notice required by sec. 6320(a) listed petitioner's tax liabilities as $19,372.79, $715.29, $15,010, $1,618.23, and $2,189.94 for the years 1984, 1985, 1986, 1987, and 1988, respectively.

Internal Revenue Service Office of Appeals (Appeals Office) in respect of the notice required by section 6320(a), nor did the Appeals Office either conduct an administrative hearing or issue a determination letter regarding the notice required by section 6320(a).

On or about October 25, 1999, respondent mailed to petitioner a Final Notice Of Intent To Levy And Notice Of Your Right To A Hearing (notice of intent to levy) concerning petitioner's unpaid tax liabilities for the years 1984 through 1988.3 The notice of intent to levy was mailed to petitioner at his last known address. See sec. 6330(a)(2)(C). Petitioner actually received the notice of intent to levy on October 27, 1999, as reflected by the U.S. Postal Service Form 3811, Domestic Return Receipt, that was signed at the time that the notice was delivered. The notice of intent to levy stated in pertinent part: "If you don't pay the amount you owe, make alternative arrangements to pay, or request Appeals consideration within 30 days from the date of this letter, we may take your property".

On December 1, 1999, the Appeals Office received a Form 12153, request for a collection due process hearing, from petitioner. Petitioner's request arrived at the Appeals Office in an envelope bearing a U.S. Postal Service postmark date of November 30, 1999.

Although the Appeals Office concluded that petitioner had failed to file his request for a hearing within the time prescribed in section 6230 or 6330, the Appeals Office granted petitioner a so-called equivalent hearing. See sec. 301.63301T(i), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3413 (Jan. 22, 1999). Petitioner attended the equivalent hearing, which was conducted on July 24, 2000. On August 17, 2000, the Appeals Office issued a "decision letter" to petitioner stating that respondent would proceed with collection by way of levy. Respondent's decision letter states in pertinent part: Your due process hearing request was not filed within the time prescribed under Section 6320 and/or 6330. However, you received a hearing equivalent to a due process hearing except that there is no right to dispute a decision by the Appeals Office in court under IRC Sections 6320 and/or 6330.

3 The notice of intent to levy stated that petitioner owed amounts from prior notices, additional penalties, and interest totaling $24,198.16, $886.24, $18,939.59, $2,053.57, and $2,797.52 for the years 1984, 1985, 1986, 1987, and 1988, respectively.

On September 11, 2000, despite the above-quoted statement in respondent's decision letter, petitioner filed with the Court a Petition For Lien Or Levy Action Under Code Sections 6320(c) Or 6330(d). In response to the petition, respondent filed a motion to dismiss for lack of jurisdiction, asserting that the petition should be dismissed on the ground that the decision letter that respondent issued to petitioner does not constitute a determination letter sufficient to invoke the Court's jurisdiction pursuant to section 6330(d). Petitioner filed an objection to respondent's motion to dismiss, asserting that respondent failed: (1) To mail the notice required by section 6320(a) to him at his last known address; and (2) to conduct a proper collection hearing.

This matter was called for hearing at the Court's motions session in Washington, D.C. Although no appearance was made by or on behalf of petitioner at the hearing, petitioner did file a written statement with the Court pursuant to Rule 50(c). Counsel for respondent appeared at the hearing and informed the Court that petitioner had recently filed a bankruptcy petition. As a result, the Court issued an order staying all proceedings in this case pursuant to 11 U.S.C. section 362(a)(8) (1994).

Shortly thereafter, respondent filed a status report with the Court stating that petitioner's bankruptcy case had been dismissed. The Court subsequently issued an order lifting the automatic stay.

This matter was called for further hearing at the Court's motions session in Washington, D.C. Although no appearance was made by or on behalf of petitioner at the hearing, petitioner did file a written statement with the Court pursuant to Rule 50(c). Counsel for respondent appeared at the hearing and offered argument in support of respondent's motion to dismiss. Counsel for respondent informed the Court that on or about March 6, 2001, respondent had issued a "substitute" notice required by section 6320(a) to petitioner concerning his unpaid tax liabilities for the years 1984 through 1988.

Discussion

Section 6321 provides that if any person liable to pay any tax neglects or refuses to pay the same after demand, the