Normac, Inc. v. Comm'r of Internal Revenue
| Citation | 90 T.C. 142,90 T.C. No. 11 |
| Decision Date | 26 January 1988 |
| Docket Number | Docket No. 11461-87. |
| Parties | NORMAC, INCORPORATED, AND NORMAC INTERNATIONAL, LIMITED, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | United States Tax Court |
OPINION TEXT STARTS HERE
Respondent sent a notice of deficiency to corporation P, in which he determined deficiencies against P. On the same day, respondent sent a notice of deficiency to S (P's subsidiary), in which he determined deficiencies against S. P and S filed a timely joint petition. The petition refers to the notice of deficiency sent to P, assigns error to respondent's determinations in that notice, and asks the Court to redetermine the deficiencies determined in that notice. The petition does not indicate the amount of the deficiency determined against S nor the amount of the deficiency S is contesting. At the time the petition was prepared, neither P nor S, nor their counsel was aware of the notice of deficiency sent to S.
HELD: This Court lacks jurisdiction to redetermine the deficiencies that respondent determined against S. Mark G. Zartarian, for the petitioners.
Margaret A. Satko, for the respondent.
The instant case is before us on respondent's motion, filed June 22, 1987, to dismiss for lack of jurisdiction as to Normac International, Limited, and to change caption. Petitioners filed an objection to respondent's motion on July 14, 1987. Respondent filed a memorandum brief in support of its motion on December 3, 1987. On December 14, 1987, petitioners filed a notice of intent not to file a brief.
Respondent determined deficiencies in Federal corporate income tax against Normac, Incorporated, and Normac International, Limited, for the years and in the amounts as follows:
+------------------------------------------+
¦Petitioner ¦Year¦Deficiency¦
+--------------------------+----+----------¦
¦Normac, Inc. ¦1980¦$28,174 ¦
+--------------------------+----+----------¦
¦ ¦1982¦24,499 ¦
+--------------------------+----+----------¦
¦ ¦1983¦24,615 ¦
+--------------------------+----+----------¦
¦Normac International, Ltd.¦1982¦114,381 ¦
+--------------------------+----+----------¦
¦ ¦1983¦58,269 ¦
+------------------------------------------+
The issue for decision is whether this Court has jurisdiction to redetermine the deficiencies determined by respondent against Normac International, Limited.
This motion has been submitted fully stipulated.
When the petition was filed in the instant case, each petitioner had its principal place of business in Arden, North Carolina.
On February 3, 1987, respondent sent a notice of deficiency to petitioner Normac, Incorporated (hereinafter sometimes referred to as ‘Normac ‘). On that same day, respondent also sent a notice of deficiency to petitioner Normac International, Limited (hereinafter sometimes referred to as ‘International‘), a subsidiary of Normac. Both Normac and International are located at Airport Road Industrial Park, in Arden. Both notices of deficiency are addressed to Post Office Box 69, Arden, NC 28704. This was International's last known address on February 3, 1987.
In the notice of deficiency that respondent sent to International, respondent, as his primary position, determined that International does not qualify as a domestic international sales corporation (hereinafter sometimes referred to as ‘a DISC‘) for 1982 and 1983 and that its net taxable income is allocable to Normac under section 482. 1 As his alternative position, respondent determined that International is not a DISC for 1982 and 1983 and is taxable on its own income under section 11. In this notice of deficiency, respondent did not determine any deficiency against Normac.
In the notice of deficiency that respondent sent to Normac, respondent, as his primary position, also determined that International is not as a DISC for 1982 and 1983, and that International's income is allocable to Normac under section 482. As his alternative position, respondent also determined that International is not a DISC for 1982 and 1983 and is taxable on its own income, under section 11. Under that alternative, Normac would have a deficiency of $1,289 for 1980, an overpayment of $89,883 for 1982, and neither a deficiency nor an overpayment for 1983. In the notice of deficiency to Normac, respondent did not determine any deficiency against International.
On May 4, 1987, a petition captioned ‘NORMAC, INCORPORATED, and NORMAC INTERNATIONAL, LIMITED, Petitioners, v COMMISSIONER OF INTERNAL REVENUE, Respondent‘ was timely filed with this Court. 2 Attached to the petition (the ‘Exhibit A‘ referred to in paragraph 2 of the petition; see n. 2, supra) is a copy of the notice of deficiency that respondent sent to Normac, together with the statement accompanying that notice of deficiency (in compliance with Rule 34(b)(8) 3). The petition did not have attached to it any copy of the notice of deficiency (or accompanying statement) that respondent sent to International.
While preparing and filing the petition, petitioners' counsel was not aware of the existence of, nor had a copy of, the notice of deficiency that respondent sent to International. Nonetheless, in preparing and filing the petition, he intended to file a petition with regard to both Normac and International. The petition sets forth petitioners' objections to adjustments determined by respondent as to both Normac and International, but those adjustments are only the ones stated in the notice of deficiency that respondent sent to Normac. Each of these determinations relates to the deficiencies respondent determined against Normac. When the petition was filed, none of the officers of Normac or International was aware of the existence of the notice of deficiency that respondent sent to International. Normac and International did not file a consolidated tax return.
Petitioners argue that since a timely petition was filed, we should take jurisdiction over International and allow petitioners to amend their petition if necessary. Respondent contends that because neither International nor its attorney was aware of the existence of the notice of deficiency, the petition was not filed ‘in response to‘ the notice of deficiency and, for this reason, we lack jurisdiction over International. In addition, respondent contends that because the petition does not contain pleadings that the deficiencies determined against International are in error, International cannot become a party to the case on the weight of Normac's petition.
We agree with respondent's conclusion.
It is well settled that this Court can proceed in a case only if we have jurisdiction and that any party, or the Court sua sponte, can question jurisdiction at any time, even after the case has been tried and briefed. Kahle v. Commissioner, 88 T.C. 1063 n. 3 (1987), and cases cited therein. We have jurisdiction to determine jurisdiction 4 and ‘whenever it appears that this Court may not have jurisdiction to entertain the proceeding that question must be decided.‘ Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 179 (1960); 508 Clinton Street Corp. v. Commissioner, 89 T.C. 352, 353 n.2 (1987). Where this Court's jurisdiction is duly challenged, the jurisdiction must be affirmatively shown. Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. at 180; Louisiana Naval Stores, Inc. v. Commissioner, 18 B.T.A. 533 (1929).
This Court's jurisdiction to redetermine a deficiency (sec. 6214(a) 5) depends on respondent's sending a notice of deficiency to a taxpayer (sec. 6212(a) 6) AND that taxpayer's filing with this Court a timely petition that we redetermine the deficiency determined against that taxpayer in that notice of deficiency (sec. 6213(a) 7). Brown v. Commissioner, 78 T.C. 215, 220 (1982); Rules 13(a) and 13(c).
In the instant case, respondent sent a notice of deficiency to Normac determining deficiencies against Normac, and another notice of deficiency to International determining deficiencies against International. Normac and International filed a timely petition with this Court. In this petition, they clearly asked the Court to redetermine the deficiency that respondent had determined against Normac. The matter we must decide is whether, in that petition (because they did not file any other timely petition), International also asked the Court to redetermine the deficiencies that respondent had determined against International.
It has been this Court's policy to be liberal in treating as petitions all documents filed by taxpayers within the 90-day period, where the documents were intended as petitions. See, e.g., Castaldo v. Commissioner, 63 T.C. 285, 287 (1974); Joannou v. Commissioner, 33 T.C. 868 (1960). However, in order to be treated as a petition from a particular notice of deficiency, the document must contain some objective indication that the taxpayer contests the deficiency determined by respondent against that taxpayer. O'Neil v. Commissioner, 66 T.C. 105, 107 (1976).
In Estate of Dupuy v. Commissioner, 48 T.C. 918 (1967), respondent had sent four notices of deficiency, one to an estate and its three executors and one to each of the three executors. In the notice to the estate and its executors, respondent determined an estate tax deficiency; in the separate notices to each of the three executors, respondent determined personal liabilities of that executor for the estate's tax liability. A timely petition was filed, captioned in the names of the estate and the three executors, and referring to the notice of deficiency that respondent sent to the estate. After the expiration of the 90-day period for filing a petition, an amended petition was filed, referring also to the separate notices of deficiency that respondent sent to each of the three executors. We granted respondent's motion to strike those portions of the...
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