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GAIN OR LOSS-Continued
poses and not taxable as part of exchange. Koch v. Commissioner,
71 T.C. 54, followed. Peabody Natural Resources Co. v. Commis-
sioner

261

INCOME

See also GAIN OR LOSS.

Earnings-Sources Outside United States-Antarctica.-
Where in filing 2001 income tax return petitioner excluded wage
income received while residing and performing services in Antarc-
tica as employee of company that contracted with U.S. agency
conducting research; petitioner excluded wages from gross income
"as not earned from sources within the United States” and claimed
entitlement to foreign earned income exclusion under sec. 911; and
Commissioner issued deficiency notice determining excluded wage
income earned in Antarctica was taxable, Court determined Antarc-
tica was not foreign country for purposes of Internal Revenue Code,
and petitioner's wage income was not excludable from income under
sec. 911, and Court granted Commissioner's motion for summary
judgment. Arnett v. Commissioner

89

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INTEREST

See also UNITED STATES TAX COURT.
Overpayment of Tax-Small Business

Business Corporation-
Applicable Interest Rate.- Where petitioner corporation, which
elected S status in 1997, was entitled to recover with interest over-
payment of tax on built-in gain (Garwood Irrigation Co. v. Commis-
sioner, T.C. Memo. 2004–195) exceeding $10,000 for TYE Dec. 31,
1999; in computing interest due on overpayment, Commissioner
used reduced rate of flush language of sec. 6621(a)(1), Federal
short-term rate plus 0.5 percent; and petitioner contended higher
interest paid to noncorporate taxpayers under sec. 6621(a)(1)(A) and
(B) applied, Court determined petitioner was entitled to higher rate
of interest (Federal short-term rate plus 2 percent) specified in sec.
6621(a)(1)(B), since lower rate of sec. 6621(a)(1) applied to C cor-
porations and 3-percent rate provided in sec. 6621(a)(1)(B) was for
noncorporate taxpayers. Garwood Irrigation Co. v. Commis-
sioner

233

INVENTORIES

See ACCOUNTING METHODS.

JURISDICTION

Action for Redetermination of Employment Status-Lim-
ited Liability Company-Applicability of Bankruptcy Auto-
matic Stay.- Where petitioner X, limited liability company orga-
nized under Tennessee law with both corporation and partnership
features, brought action for redetermination of employment status

Page

JURISDICTION-Continued
under sec. 7436 and Tax Court Rule 291; X was owned and oper-
ated by H and W, who had filed ch. 7 bankruptcy petitions;
Commissioner's notice of worker classification determined that 13
specified individuals were X's employees and X consequently owed
additional employment tax for calendar year 2000; on Jan. 13, 2006,
pursuant to Tax Court Rule 91(f), Commissioner filed motion to
show cause why proposed facts and evidence should not be accepted
as established; and, in response, petitioner contended case should

stayed automatically pursuant to 11 U.S.C. sec. 362(a), Court
determined (1) automatic stay provision of 11 U.S.C. sec. 362(a)(8)
was inapplicable to proceeding concerning X's employment tax
liabilities because X had not filed petition in bankruptcy court and
was not debtor therein, and (2) consideration of equitable relief
under 11 U.S.C. sec. 105(a) lay with bankruptcy court, not Tax
Court. People Place Auto Hand Carwash, LLC v. Commis-
sioner

359

LOSSES
See CAPITAL GAINS AND LOSSES.

.

PENALTIES

See CONTRIBUTIONS.

RETURNS

Joint Liability and Claim for Sec. 6015 Relief-Refund-
Community Property Assets Used To Satisfy Understate-
ments Attributable to Spouse's Erroneous Item.- Where H
and petitioner W, resident of community property State, had paid
tax liabilities determined on jointly filed 1982–84 income tax
returns but additional tax liabilities arose that were attributable to
H's erroneous items; Commissioner applied payments to liabilities
attributable to H’s erroneous items from “community property"
(defined in Cal. Fam. Code sec. 760 (West 2004)) and from W's
"separate property” (defined in Cal. Fam. Code sec. 770(a) (West
2004)); Commissioner conceded W's entitlement to sec. 6015(b)
relief for 1982–84, resulting in zero liability for W; and W's petition
for relief from joint and several liability sought sec. 6015(g) refund
of payments Commissioner applied to H's understatements using
W's separate property and community property, Court determined
W was not entitled to refund of community property amounts used
to pay H's understatements, since Congress did not intend for
community property laws to be disregarded under sec. 6015(g)(1)
regarding payments made on tax liabilities. Ordlock v. Commis-
sioner

47

SMALL BUSINESS CORPORATIONS

See INTEREST.

Page

sec.

UNITED STATES TAX COURT
Interest on

on Overpayment of Corporate Tax-Interest
Accrued as of Dec. 31, 1994–Applicability of Compound
Interest Rate or Reduced Rate of Sec. 6621(a)(1).- Where, as
of Jan. 1, 1995, effective date of amended sec. 6621(a)(1), petitioner
corporations had received refunds of overpayments exceeding
$10,000 for taxable years 1979–85 and had outstanding accrued
overpayment interest balance of $1.6 billion, which was paid in
2004–2005; Commissioner contended reduced 6621(a)(1)
interest rate applied to overpayment; and petitioners contended
regular sec. 6611 corporate overpayment interest rate continued to
apply after Dec. 31, 1994, to accrued overpayment balance (com-
pounded daily pursuant to sec. 6622), Court determined all of
petitioners’ Dec. 31, 1994, $1.6 billion overpayment interest accrued
interest at reduced sec. 6621(a)(1) rate. (Gen. Elec. Co. v. United
States, 56 Fed. Cl. 488 (2003), and State Farm Mut. Auto. Ins. Co.
v. Commissioner, 126 T.C. 28, followed). Exxon Mobil Corp. &
Cos. v. Commissioner

.

36

Interest on Overpayment of Tax-Regular Rate or Lower
Sec. 6621(a)(1) Rate on Interest Accrued as of Dec. 31, 1994-
Applicability of $10,000 Threshold.-Where Court earlier held
that petitioner had 1987 overpayment (State Farm Mut. Auto. Inc.
Co. v. Commissioner, 119 T.C. 342); on Dec. 15, 2004, Commissioner
issued two checks covering petitioner's overpayment plus interest;
petitioner moved under Rule 261 and sec. 7481(c) for higher rate of
interest on overpayment because Commissioner had used reduced
rate of sec. 6621(a)(1) (GATT rate) in compounding interest that
had accrued before 1995; petitioner contended regular rate of
interest continued to apply after Jan. 1, 1995, to previously accrued
interest; and parties disputed whether $10,000 threshold of sec.
6621(a)(1) applied to highest total overpayment that previously
existed or amount at Dec. 31, 1994, effective date of GATT rate
change, Court determined (1) GATT rate applied to interest owed
petitioner as of Dec. 31, 1994; and (2) entire remaining overpay-
ment of tax was subject to GATT rate, since amount exceeding
$10,000 threshold had already been refunded on due date of return
for 1987 taxable year. State Farm Mut. Auto. Ins. Co. v.
Commissioner

28

VALUATION

See ACCOUNTING METHODS.

650 02 COMEKUWENI IKILIC OŁEICE: 5000–350-80t\10023

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