In Uncategorized on 06/06/2017 at 15:39

One of the longer-running shows at The Glasshouse at 400 Second Street, NW is Diebold Foundation, Transferee, Docket No. 24702-08, filed 6/6/17. It seemed to be winding down after trial, a trip to 2nd Cir, and a collapse of the ring-a-ring-rosie that tried to marry a made-up loss to a heavy gain, the ancestor of any number of Section 6901 give-and-goes.

But now the agile attorneys for Diebold turn to the existence of collapsed Double-D Ranch, the corporate intermediary for whom Diebold was transferee.

They claim the original SNOD is invalid, because it listed the wrong year. Double-D ran a short year because it consolidated with Diebold, but as the transaction had been collapsed, the short year collapsed as well, and the correct tax year wasn’t the short year but the full year. It only took them four (count ’em, four) years to come up with this.

“Double-D Ranch filed a short year return on the basis that it entered into a consolidated group upon the sale of the stock on July 2, 1999. A corporation’s tax year ends when the corporation becomes a member of a consolidated group. Sec. 1.1502-76(b)(1)(ii)(A)(1), Income Tax Regs. Petitioner argues that as the Court has held no stock sale occurred in substance, Double-D Ranch did not become a member of a consolidated group on July 2, 1999, and accordingly, it was improper for Double-D Ranch to file a short year return. Petitioner’s argument follows that because it was improper to file a short year return, the notices of deficiency and transferee liability based on the short year are invalid and the Court lacks jurisdiction. Petitioner argues that Double-D Ranch’s proper taxable year is July 1, 1999 through June 30, 2000. According to petitioner, the Commissioner should have issued the notice of deficiency and the notice of transferee liability for Double-D Ranch’s taxable year ended June 30, 2000. See IRC sec. 7701(a)(23); sec. 7701(a)(24).” Order, at p. 2.

I give the Diebold attorneys, from a well-known firm that originated in Chicago, a Taishoff  “good try, third class.”

Judge Goeke doesn’t even give them an “Oh Please!”

“Double-D Ranch in substance liquidated and terminated its existence for Federal tax purposes on July 2, 1999. It was proper for respondent to issue notices on the basis of the short year ending July 2, 1999. The notices of deficiency and transferee liability were valid, and the Court has jurisdiction in this case.

“Furthermore, even if we were to find that respondent issued the notices with respect to an incorrect taxable period, we would hold that the error did not invalidate the notices because the error did not mislead petitioner.” Order, at pp. 4-5.

You picked it, Double-D, you own it.

Judge Goeke, you spent six (count ’em, six) pages, and much “somber reasoning and copious citation of precedent,”on this order. Why not designate it? I have work to do, so make it easy for the poor blogger. Please.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: