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USCA1 Opinion

March 30, 1993


[NOT FOR PUBLICATION]

UNITED STATES COURT OF APPEALS


FOR THE FIRST CIRCUIT
___________________
No. 92-1938

PETER A. JOHNSON AND CLAIRE P. LYON,


Petitioners, Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent, Appellee.
__________________
APPEAL FROM THE UNITED STATES TAX COURT
[Hon. Theodore Tannenwald, U.S. Tax Court Judge]
____________________
___________________
Before
Selya, Cyr and Boudin,
Circuit Judges.
______________

___________________

Peter A. Johnson and Claire P. Lyon on brief pro se.


________________
______________
James A. Bruton, Acting Assistant Attorney General, Gary R.
_______________
_______
Allen, Jonathan S. Cohen and Regina S. Moriarty, Attorneys, Tax
_____ __________________
___________________
Division, on brief for appellee.
__________________
__________________

P. Lyon, appeal a decision of the Tax Court that sustained a


Per Curiam. The appellants, Peter A. Johnson and Claire
__________

Tax Court's decision.


appellants' joint income tax return for 1986. We affirm the
deficiency determined by the Internal Revenue Service on the

I
_

-2-

shareholders of liquidating corporations.


Under 26 U.S.C.
Hampshire. Mr. Johnson is a certified public accountant and

regulation. In 1980, Mr. Johnson and Ms. Lyon incorporated


primarily to law firms practicing in the field of energy

Peter A. Johnson Associates, Inc. (PAJA), through which Mr.


for a number of years made his living as a consultant,

corporation initially issued 100 shares of stock: 51 shares


Johnson then carried on his consulting business.
The
Mr. Johnson and Ms. Lyon are married and reside in New

to Mr. Johnson

and 49 shares

to Ms. Lyon.

The corporation

Trust.

consulting work
he accepted a

tapered off.
Late in 1986, with PAJA
salaried position at a hospital and his

relatively dormant, Mr. Johnson and Ms.


Mr. Johnson worked full-time for PAJA

Lyon decided to
until 1985, when

shareholders.
liquidate the company and distribute its assets
later sold 8 more shares to an entity known as PAJA

to the
Pension

At
the time, the tax laws
offered a choice
331, they could recognize all of the distributed assets
their

income

tax

returns

liquidation occurred,

but pay

for

the

year

in

taxes on the

which

to
on
the

distribution at

the capital gains rate, which was lower than the rate applied
to

"ordinary income" such as

could

wages or dividends.

Or, they

elect to treat the distribution under 26 U.S.C.

Section

333

distributed

required
assets

profits, and (2) all


declare
earnings

the

portion

the

to

two

shareholders

to

allocate

the

categories:

(1)

earnings

and

other assets.
of

333.

The shareholders

the distribution

that

came

had to
from

and profits as ordinary income on their returns for

the

year in which the liquidation occurred, and pay taxes on

it at the higher income


the portion of

the distribution

corporation's other
recognizing any
Roughly

tax rate.

However, with
that took the

assets, the shareholders

gain until they themselves

respect to
form of

the

could postpone
sold the assets.

speaking, then, Section 333 was a good deal only for

shareholders of

"a corporation holding

but having little

or no earnings

appreciated property

and profits . .

. ."

B.

Bittker & J. Eustice, Federal Income Taxation of Corporations


_______________________________________
and Shareholders
_________________
corporation

had

at

11.62

(5th

significant
better

ed.

earnings

shareholders

were

off

recognizing a

gain immediately on

1987).

If

the

and

profits,

the

electing

Section

331,

the entire

distribution,

-3-

but

avoiding

taxation of

the earnings

and profits

at the

higher income tax rates.


This

case concerns

the

appellants' election

to treat

PAJA's

distributed

dissolved
knew

that

assets

under

the corporation at the


Congress

January 1, 1987.

had

333

end of 1986.

repealed

Section

when

liquidate PAJA by year's end.


he did not sit

they

Mr. Johnson

333,

effective

See Pub.L. 99-514, Title VI,


___

Oct. 22, 1986, 100 Stat. 2273.

intervened,

Section

631(e)(3),

He thus felt some urgency to


But, because personal business

down to the

task until December

28, 1986.
Mr. Johnson and Ms. Lyon
on December 28.
Corporation
showed

Income

first was a Form 1120-A,


Tax Return"

for

that PAJA had assets of

earnings"
amount

The

executed a number of documents

constituted

of earnings --

PAJA.

a "Short-Form
This

document

$132,249, of which "retained

$96,311.

With

such a

which the shareholders

significant
would have to

declare as ordinary income under Section 333, but could treat


as

capital gain

under Section

331 --

liquidation under

Section 333 was an unwise choice.


However,
fully

the appellants

explained,

profits" at zero
or Section 333.
shareholder

made

Mr. Johnson

it.

For reasons

figured PAJA's

when deciding whether to

never

"earnings and

elect Section 331

Consequently, he and Ms. Lyon made a written

resolution

to liquidate

-4-

the

corporation under

Section 333.
Form 964,

Each of them executed and filed with

which bears

under Section
and

filed,

captioned

the caption "Election

333 Liquidation."
on

behalf

"Corporate

of

Section 333

which the

corporation is

Mr.

Johnson then

that

$63,632

or

to be

Form

of the

966,
which

Code under

dissolved or liquidated."
on PAJA's

than $137,000

to Ms.

Liquidation,"

the "Section

wrote checks

distributed more

himself,

as

also executed

corporation,

Dissolution

identified

of Shareholder

Mr. Johnson

the

the IRS a

Lyon, and

corporate account

in assets:
$9,622 to

$64,607 to
PAJA Pension

Trust.
Four months later,
their joint

income tax

when Mr. Johnson and


return

for 1986,

attached copies of the already-filed


IRS

to their election, see


___

6(a)(5), and
pursuant

treated their

Ms. Lyon filed

they should

have

Forms 964, to alert the

26 C.F.R.

1.333-3 and 1.333-

share of the

distributed assets

to Section 333 -- that is, by declaring the portion

attributable to earnings and

profits as ordinary income, but

postponing recognition of any gain on the remainder.


The appellants
them to

do.

income tax

They

did not do what


did not attach

return contained

their election required


Form 964; in

no mention of

fact, their

the liquidation.

It

characterized all of the money they had received from the

liquidation as
treated

proceeds

the entire

of

"sale" of

distribution as

PAJA

stock,

a capital

and

gain.

This

-5-

calculation
under

would

Section

unaccompanied
Section

have been

331,

or

consistent with

with

simple

a liquidation
sale

of

stock

by a liquidation, but it did not jibe with the

333 election

the appellants

had made

the previous

December.
The
further

IRS accepted
action

the

until

an

appellants' return
audit

inconsistency between the election


tax

treatment

return.

The

revoke their
liability

given
IRS then

the

to take

distribution

election,

the election

1988

revealed

no
the

under Section 333 and the

rejected the

Section 333

in

and took

in the

appellants'

appellants' efforts

to

recalculated their

tax

into account,

determined a

deficiency of $24,790, and added penalties for negligence and


for making a
appellants

substantial understatement of taxes

owed.

The

sought review in the Tax Court, which held a one-

day trial

and

sustained

the IRS'

actions.

This

appeal

followed.
II
__
Mr.
for

taxes

Johnson and Ms. Lyon


calculated

say that they

according

to

are not liable

Section

333

for

two

reasons: first, because they never made a valid election; and


second, because

their election, even if

formally valid, was

based on a mistake and was therefore revocable.


A
_

-6-

The appellants point to a number of errors they say they


made

while attempting

PAJA, and assert


333's

(or in

statute.

This

compliance

elect Section

333 and

that strict compliance with

requirements

benefits

to

is

necessary

this case,
is

needed

not
to

in

suffer the

completely
make

order

valid

liquidate

all of Section
enjoy

the

detriments) of

the

true.
tax

to

The

level

election

of

varies

according

to the nature of

insist upon full compliance

the requirement.

The IRS "'may

with [its] regulations' when the

regulatory requirements relate to the substance or essence of


a

statute, but

[the Tax

Court

has] held

that substantial

compliance with regulatory requirements may suffice when such


requirements are procedural and
purposes have

been fulfilled."

Commissioner, 81 T.C.
____________
See also Dunavant
________ ________

709, 719

when the essential statutory


American Air Filter Co. v.
________________________
(1983) (citations

omitted).

v. Commissioner, 63 T.C. 316 (1974) (same,


____________

construing Section 333).


Two

of the

violated
provide
26

--

regulations which

26 C.F.R.

the appellants

1.333-6, which

supplemental information about

C.F.R.

1.333-3, which

Form 964 along


plainly do

say they

required

them to

the liquidation, and

required them to

file a copy of

with the original at the time

of election --

not go to

therefore "procedural"

the "essence" of

the statute

in the sense discussed

breach will not defeat the election.

-7-

above.

and are
Their

The

other asserted

First, the appellants


complete

defects

redemption of

333(a)(1), because

listed the number

some

discussion.

say that the distribution was

cancellation or

U.S.C.

require

their

all the

Forms 964

of shares each held.

not "in

stock," 26
inaccurately

Mr. Johnson owned 51

shares at the time of the election, but listed only 47 in his


Form 964; Ms. Lyon owned 49 shares, but listed only 46.
The premise does not support the conclusion.
the

record

causes us

to believe

that,

company's assets, Mr. Johnson and Ms.


up anything

Nothing in

in return

for the

Lyon (and PAJA Pension

Trust) actually

gave

shares in PAJA.

And if that is so, then the distribution was


____________ ___

"in complete

cancellation or

Putting

wrong count

substance

the

less

than all

redemption of all

on the

forms

did not

of

their

the stock."
affect the

of the liquidation and therefore did not go to the

essence of the statute.


Second, the appellants claim that they failed
timely election.

Section 333(d)

says: "The filing

to make a
[of the

written

election form] must be within 30 days after the date

of

adoption of

the

indicate that this

the plan

of

liquidation."

is an "essential" requirement.

The cases
Shull v.
_____

Commissioner, 291 F.2d 680, 682-85 (4th Cir. 1961); Kelley v.


____________
______
Commissioner, 10
____________
and when

T.C.M. 143,

146 (1951).

However, whether

a plan of liquidation was adopted "is a question of

-8-

fact ordinarily for the

Tax Court," Shull, 291 F.2d


_____

at 684,

and thus subject to review only for clear error.


We see no
evidence

error in

clearly

the Tax Court's

establishes December

finding that
28,

"the

1986 [when

the

appellants executed a written shareholder resolution], as the


date of the adoption of the plan of liquidation."
that

Mr. Johnson

testified

that he

"decision" to liquidate PAJA sometime


is also true that Section

and

It is true

Ms. Lyon

made

in November 1986.

333 does not require "that a

a
It

plan

of liquidation must be in writing or in any particular form."


Shull, 291 F.2d at 682.
_____
But

the

shareholders
Shull,
_____

statute
to

the Fourth

"adopted" a

does

by

"adopt" some
Circuit

its

"plan"

held that

plan of liquidation

terms

require

the

liquidation.

In

the shareholders

had

of

before they
______

made a

formal

resolution to

that effect only because

previously "acted deliberately .


the

other than

far in

its existence for all purposes

liquidation. . . ."

this sort

December 28

happened
was the

here.

corroborate Mr.

291 F.2d at 684-85.


The

Nothing

resolution executed

first manifestation of

intention to dissolve PAJA.


to

. . and had gone so

actual execution of a plan of liquidation as to dissolve

the corporation and terminate

of

the shareholders had

the appellants'

In the absence of

Johnson's testimony,

on

any evidence

the Tax

Court was

entitled to find either that the "decision" in November never

-9-

happened, or that it happened but was too indefinite an event


to trigger the statutory

filing requirement, and to conclude

that the

not "adopt"

appellants did

a plan

of liquidation

within the meaning of Section 333(d) until December 28 -- the


same day that they made the election and filed Form 964.
Third,

the

appellants

contend

that

PAJA

failed

to

distribute all of its assets before the end of December 1986,


thus

violating

Section

333(a)(2),

which

says

that

the

benefits of election are


all

the property

available only if "the transfer

under liquidation

calendar month."

his

transaction

wife
had

Johnson wrote corporate checks to

and

to

calendar month."
was

some one

Since the bulk of the distribution occurred

in December 1986, when Mr.


himself,

occurs within

of

PAJA

be

Pension

completed

during

But, the appellants

not completed

until March

Trust,

the

that

entire

same

"one

say, the distribution

1987, when

Spriggs,

Bode &

Hollingsworth (one of PAJA's law firm clients) made a payment


of

$6,727 for

"services

rendered during

November 1,

1986

that

some

through March 10, 1987."


We

agree

with

"indeterminate"

the

portion

Tax
of

attributable to services

this

Court

payment

only

--

rendered before PAJA was

the

part

dissolved

at the end of December 1986, and thus "earned" by the company


-- can

be

considered

shareholders.

"distribution" from

PAJA

to

its

Any money paid for services rendered after the

-10-

dissolution

was

money that

Mr. Johnson

earned on

his own

behalf.1
The late distribution of
-- something less
PAJA's

assets

election.
tax

such a relatively small amount

than $6,727 and

-- does

not

affect

that

require

accomplished within

corporate

specific

(Blackmun,

J.).

distribution

certain period in

F.2d 669, 677

Thus, when
of

all

order to

to dispose of a

tax

of the
of

qualify for a

minor portion of

to

(8th Cir.

1966)

on its

assets

face

within

tax benefit,

(calling
Meyer
_____
grounds
_______

this the

v.

Commissioner, 35
____________

"de minimis

v. Commissioner, 15
____________
200 F.2d 592

a
the

the assets within

the time allotted will not defeat the taxpayer's choice.


Mountain Water Co.
____________________

be

Cherry-Burrell
______________

statute

corporate

the

respect to

liquidations

time limits.

Corp. v. United States, 367


_____
______________

failure

the legitimacy

A "liberality of approach" exists with

statutes

requires

thus less than 5%

T.C.

418

See
___

(1960)

rule"); Estate of Lewis B.


____________________

T.C. 850

(5th Cir. 1952)

(1950), rev'd on other


_______________
(it "would be

out of

line with [the predecessor to Section 333] . . . to hold that


the failure, within the calendar month, physically to deliver

____________________
1.
For the same reason, a check
client in March 1987 was not part

received from a second


of the distribution of

corporate assets because it represented payment of Mr.


Johnson's monthly retainer for January, February, and March
1987 -- i.e., money earned after the dissolution by Mr.
Johnson, not by the corporation.
-11-

less than 6 percent

in book value of the

distributed assets

destroys the election. . . ").


Finally, the appellants would have us rule that, because
they reincorporated PAJA in

1991, they are not bound

election they made more than four years earlier.


no

useful authority

revenue rulings

this proposition.

they cite

question whether
first place.

for

a complete liquidation had

Their belated

involved the

occurred in the

other

In this case,

complete and permanent

than

a tax
to

deficiency (and
escape

the

v.

the record

distributed PAJA's assets

revival of the corporate form,

had determined

reason

(1974).

the appellants

successful pursuit of a

IRS

cases and

See, e.g., Telephone Answering Service Co.


__________ _______________________________

Commissioner, 63 T.C. 423


____________
shows that

They supply

The

are inapposite; all

by the

in the

liquidation.
done after the

for no

consequences

apparent
of

that

determination), "did not alter the character" of the previous

distribution or affect the validity


Kennemer
________

v.

Commissioner, 96
____________

of their election.

F.2d

177,

178-89 (5th

See
___
Cir.

1938).
B
_
Even

if

their

election was

procedurally

valid,

the

appellants say, the IRS should have allowed them to revoke it


because it was based on the mistaken belief that
"earnings

and profits"

Although

(with

one

to

distribute to

exception

not

PAJA had no

its shareholders.

relevant

here)

the

-12-

regulations
written

implementing

Section

333

say

flatly

that

election to be governed by that provision "cannot be

withdrawn
appellants

or

revoked,"

believe that

26

C.F.R.

a taxpayer may

1.333-2(b)(1),

the

nevertheless obtain

relief from an election made as the result of a mistake.


The courts have on
mistaken

elections.

occasion allowed taxpayers to revoke


See,
e.g.,
___________

Meyer's Estate
_______________

v.

Commissioner,
____________

200

Wilkinson, 36
_________

F.2d 807 (E.D.Wis.

Commissioner, 47
____________
Section 333).

F.2d 592

(5th

1952); McIntosh
________

1929);

T.C.M. 731 (1983)

However,

Cir.

v.

DiAndrea, Inc. v.
_______________

(revoking election under

in each of these cases

the taxpayer

made what the court characterized as a "mistake of fact."

In

deciding whether to allow taxpayers to revoke otherwise-valid


elections, the courts have consistently distinguished between
mistakes of fact, which

may justify revocation, and mistakes

of law, which will not.

See Bankers & Farmers Life Ins. Co.


___ ________________________________

v. United States, 643 F.2d 234, 238 (5th Cir. 1981); Shull v.
_____________
_____
Commissioner, 271 F.2d 447,
____________

449 (4th Cir. 1959); Raymond


_______

v.

United States, 269 F.2d 181, 183 (6th Cir. 1959); Grynberg v.
_____________
________
Commissioner,
____________

83

T.C.

255,

Commissioner, 63 T.C. 527 (1975).


____________
ignorance

of

unawareness of
miscalculation,
been

the

law,

the tax

(1984);

of

consequences of making

to

subsequent

mitigate the

-13-

Cohen
_____

v.

"Oversight, poor judgment,

misunderstanding

and unexpected

held insufficient

261-63

the

law,

an election,

events have

all

binding effect

of

elections made under a variety of provisions of the [Internal


Revenue]

Code."

Estate of Stamos v.
_________________

Commissioner, 55 T.C.
____________

468, 474 (1970) and cases cited therein.


The

appellants

distinction,

but

do

not

argue

question the

that

the

Tax

wisdom
Court

of

this

erroneously

described their mistake as one of law.

We agree with the Tax

Court.

Mr. Johnson's

The

mistake in

this case was

stated

belief that PAJA had no "earnings and profits," and thus that
the

shareholders

distribution

could

defer

under Section

this could have been a


"[M]istakes of fact

333.

of

Depending on

the

occur in instances where

they are believed to."

entire

its source,

mistake of fact or a mistake


__

facts exist, but are unknown,


as

recognition

of law.

either (1) the

or (2) the facts do

not exist

Hambro Automotive Corp. v. United


_______________________
______

States, 603 F.2d 850, 855 (C.C.P.A. 1979). If Mr. Johnson had
______
decided that PAJA

had no "earnings

believed it had no money in the


have been a mistake of fact.

and profits" because

he

bank, then his mistake would

But, as the Tax Court found, it

is "difficult to believe" that the appellants were unaware of


PAJA's

cash reserves when they made the election on December

28, 1986, for on


PAJA,

executed a

company

had more

wrote checks

the same day, Mr. Johnson,


corporate tax

return indicating

than $96,000

to himself, Ms.

as president of

in "retained
Lyon and

that the

earnings," and

PAJA Pension

Trust,

-14-

drawn

on

the corporate

bank

account,

totaling more

than

$137,000.
Since the appellants knew how much money the corporation
had

in

the

bank when

they

made

the

plausible explanation for their mistake


know

that

subject
See
___

the

money

to taxation

constituted
as ordinary

election, the

only

is that they did not

"earnings
income under

and

profits"

Section 333.

GPD, Inc. v. Commissioner, 508 F.2d 1076, 1082 (6th Cir.


_________
____________

1974) (corporation's
"exact

relation"

to

"earnings and profits" may


earnings

as

determined

not bear an
by

"normal

corporate accounting methods"); Bennett v. United States, 427


_______
_____________
F.2d

1202, 1208 (Ct.Cl. 1970) ("'earnings and profits' . . .

is

a tax,

mistake
their

not an

economic concept").

Thus, they

made a

of law, which occurs "where the facts are known, but


legal consequences are not known or are believed to be

different than

they really are," Hambro Automotive Corp. v.


________________________

United States, 603 F.2d


______________

at 855 (emphasis

omitted), and may

not revoke their election.


III
___
The

IRS made

liability.

First,

6653(a)(1),
.

of

tax

negligence

two

"additions" to

it

added

the appellants'

$1,240

under

26

tax

U.S.C.

which says: "If any part of the underpayment . .


required

to

be shown

(or disregard

of

on

rules or

return

is

due to

regulations),

there

shall be added to the tax an amount equal to 5 percent of the

-15-

underpayment."
care

or

prudent

"Negligence in this context is a lack of due

failure to
person

Commissioner's

would

do

what
do

imposition

reasonable and

under
of

the
a

ordinarily

circumstances.

negligence

addition

The
is

presumptively
burden

correct,

of proving

negligent

leaving

that

the

[appellants]

their underpayment

or intentional

rules

Cir. February 9, 1993).


on

negligence

for

due to

McMurray
________

slip op. at 13

We review the Tax

issues only

was not

violations."

Commissioner, Nos. 92-1513 and 92-1628,


____________

with the

v.
(1st

Court's findings

clear error.

Leuhsler v.
________

Commissioner, 963 F.2d 907, 910 (6th Cir. 1992).


____________
There was

no error.

occurred because

The

"underpayment" in

the appellants, having elected

this case
in December

1986 to treat their taxes under Section 333, instead prepared


their

tax return the following

elected

Section

331

or

April as if

made

unaccompanied by a liquidation.

simple

they had either


sale

of

stock

Under the circumstances, and

absent a compelling explanation to the contrary, one might -as the Tax

Court appears

Memorandum

Opinion

deliberate, since

--

to have done
infer

in its

that the

making it promised to

Supplemental

"switch"

here

was

save the appellants

some $24,000, and since the appellants obscured the de facto


_________
revocation

of

distribution as
neglecting

to

their

previous

a "sale" rather
attach Form

election

than a liquidation,

964 to

-16-

by describing

their

return.

the

and by
But the

negligence

penalty was

accidental;

like the

about a

appropriate even
Tax Court,

if the

we see

certified public accountant's

switch was

nothing reasonable

failure to

calculate

his tax liability in accordance with his own election and the
Code's explicit instructions.2
The IRS

also added $6,198

Section 6661(a) imposes

under 26

U.S.C.

a 25% addition to an underpayment if

"there is a substantial understatement of income


taxable

year."

understatement
the tax for the

Section

as one that exceeds the greater of (1) 10% of


year or (2) $10,000.

tax treatment

authority" for the


to

tax for any

6661(b)(1)(A) defines a substantial

reduces the understatement by


the

6661(a).

of

an

Section 6661(b)(2)(B)

any amount attributable to (i)

item

if there

treatment, or (ii) any

which the relevant facts affecting

was

"substantial

item with respect

its tax treatment are

adequately disclosed in the return or a statement attached to


it.
The
$24,000,

appellants
which was

____________________

understated their
almost

50% of

the

taxes

by more

tax for

the

than
year.

2. Ms. Lyon's reliance on her husband's expertise does not


excuse her negligence.
Although Section 6653(b), which
authorizes an addition to tax for fraud, contains a "special
rule for joint returns" that allows the IRS to penalize a
spouse only to the extent that the underpayment is due to her
own fraud, 26 U.S.C.
6653(b)(3), Section 6653(a), which
authorizes the penalty for negligence, contains no such
qualification.
See Langer v. Commissioner, 59 T.C.M. 740
___ ______
____________
(1990) (sustaining negligence penalty against both spouses
where husband, an IRS agent, prepared the erroneous return).
-17-

However,

they

requirement

claim
with

to

respect

because, when they

have

satisfied

to

the

was inadequate for


the return or
C.F.R.
the time

two reasons.

on a

1.6661-4(a)
of

entire

made the election in

filed Forms 964 and 966 with the IRS.

First,

understatement

this "disclosure"
it was not

to the

Second, filing

liquidation, nearly

disclosure

December 1986, they

But

statement attached
and (b).

the

four months

made on

return.

26

a Form 964 at
before a

tax

return is due, is not an act that "reasonably may be expected


to apprise the

Internal Revenue Service

the item,

amount,

and

the

concerning

the

item."

controversy

its

4(b)(1)(iv) and

1.6661-4(b)(4).

nature
26

of the identity
of

the

C.F.R.

of

potential
1.6661-

That is precisely why

the

regulations require the shareholder to file Form 964 twice -once upon making the

election and again with his

return.

1.333-3 and 1.333-6(a)(5).

26 C.F.R.

The IRS has


Section
that
and

6661 addition to tax

to waive

all or

"on a showing

part of

by the taxpayer

there was reasonable cause for the understatement . . .


that the taxpayer

6661(c).

acted in

The most important

"the extent
tax

the authority

income tax

good faith."

factor in waiver

of the taxpayer's effort to

liability under the

law . .

. ."

26

U.S.C.

decisions is

assess [his] proper


26

C.F.R.

1.6661-

6(b).

-18-

We review the
discretion.
Cir. 1990);
(1988).
that

For

IRS' waiver

decision only

for abuse

of

Heasley v. Commissioner, 902 F.2d 380, 385 (5th


_______
____________
Mailman v.
_______

Commissioner, 91 T.C.
____________

the reasons already

stated, we

1079, 1083-84
are confident

the IRS did not abuse its discretion by concluding that

reasonable

people acting in good faith would not (a) fail to

pay the tax in


to

accordance with their election, and

notify the IRS that

they were, in

(b) fail

effect, revoking that

election.
The appellants' Motion for Oral Argument is denied.
The judgment of the Tax Court is affirmed.
________

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