In Uncategorized on 02/03/2020 at 14:10

A Rule 155 beancount is just that: an arithmetic show-and-tell where IRS and petitioner each do the numbers, proffer the correct arithmetical solution, and nothing else.

Judge Pugh holds the parties to their stipulated issues, and refuses to consider anything not pled, proven or stiped, in Manatt’s Enterprises, Ltd., Docket No. 17908-17, filed 2/3/20.

Manatt petitioned the SNOD denying their NOL carryforward and certain management fees they paid and received.

Now Manatt want to throw in a Section 199 DPAD, an increased State tax deduction, and a dividends received deduction (which depends upon the outcome of another case).

As for wild-carding in matters in a Rule 155, see my blogpost “Non-Virgin and Non-Deductible,” 2/4/19. There is no after-party in Tax Court, just a clean-up.

IRS and Manatt stiped to “…all correlative adjustments that arise from the other adjustments set forth herein.” Order, at p. 2. And they also agreed that the stip settled everything in the SNOD and the petition.

Judge Pugh: “Petitioner does not ask us to set aside or modify the stipulation. Rather, petitioner asks us to interpret the word ‘correlative’ in the stipulation to include the additional adjustments it asserts are appropriate. Respondent counters that none of the additional adjustments petitioner requests are correlative, but instead are new issues that were never raised in the petition or at any point in this proceeding until respondent sent petitioner the proposed decision. Consequently, respondent argues, these issues are deemed conceded.” Order, at p. 3.

And because Manatt may have mentioned DPAD in an attachment to its return doesn’t matter if they never stated it in the return proper nor petitioned disallowance. “The fact that petitioner may have included information on a form attached to its tax returns that respondent could use to determine the section 199 deduction petitioner now is asserting does not make the section 199 deduction purely computational. Petitioner never claimed a section 199 deduction in either tax year so there is no indication respondent accepted or scrutinized the information on those forms. Moreover, petitioner’s tax returns are merely statements of its position; they do not constitute substantiation.” Order, at p. 5.

And the dividends received deduction depends upon whether the payout in the other case came from E&P. Judge Pugh isn’t going to wait for that omelet to heat up.

Once again there falls the shadow of my mantra: Stipulate, Don’t Capitulate.

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