Opinion
21908-19
01-06-2023
HARBINDER S. BRAR & BARBARA P. BRAR, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Elizabeth A. Copeland, Judge.
On February 1, 2021, Petitioners' filed with the Court a Motion for Partial Summary Judgment (the "Motion") which moves, pursuant to Rule 121(a) for partial summary judgment with respect to Respondent's officers' compensation adjustments reflected in his October 8, 2019, notice of deficiency. Respondent filed a response to the Motion on March 25, 2021; and Petitioners filed a reply to that response on April 5, 2021.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
On October 27, 2021, the parties filed a First Stipulation of Settled Issues, wherein the parties settled the officers' compensation issues in this case. On October 27, 2021, Petitioners filed a Status Report, wherein they explain that they have settled all of the issues raised in their Motion except for one: "[W]hether there is a tax deficiency that arises from Respondent's now settled increases to Petitioners' officer compensation wages that are offset by the corresponding increased wage expense deduction[s]." In this Order, we will retitle Petitioners' October 27, 2021, Status Report as "First Supplement to Petitioners' February 1, 2021, Motion for Partial Summary Judgment." We will deny the Motion as moot insofar as it relates to the settled issues and explain our ruling on the overall Motion in the paragraphs that follow.
The parties initially filed the First Stipulation of Settled Issues (Index No. 32) on October 21, 2021, but that filing had missing pages. The parties filed a complete First Stipulation of Settled Issues (Index No. 34) on October 27, 2021. The incomplete filing (Index No. 32) will be striken from the record.
The remaining issue in the Motion is a computational one, which is premature for our decision at this juncture. As laid out in our Rules 155(a) and (b), the Court through opinion or dispositive order determines the issues in a case and then the parties are permitted to submit computations. If the parties are in agreement as to the amount to be included in the Court's decision such computations are submitted "pursuant to the Court's determination of the issues, showing the amount to be included in the decision." Rule 155(a). And, to the extent the parties do not agree, "then each party shall file with the Court a computation of the amount believed by such party to be in accordance with the Court's findings and conclusions." Rule 155(b). Simply put, the Court is tasked with finding facts and making conclusions of law, not with calculating taxes as Petitioners' Motion desires.
We note that Petitioners raised issues in their Motion that they did not address in their Supplement (e.g., Petitioners argue that Respondent's officer's compensation adjustments constitutes an employment tax issue over which the Court does not have subject-matter jurisdiction, and that the period of limitations for assessment of employment tax has expired for the tax years at issue). Given that the compensation issues have settled, in the event and to the extent that these issues are not moot, we deem Petitioners to have abandoned them. See Nicklaus v. Commissioner, 117 T.C. 117, 120 n. 4 (2001); Rybak v. Commissioner, 91 T.C. 524, 566 n. 19 (1988).
The First Stipulation of Settled Issues quite favorably cements the adjustments that increased wages to the Brars and correspondingly decreased the pass-through income from their S-Corporations (as a result of the corresponding compensation expense deductions to those entities) for the 2012 through 2015 tax years at issue in this case. At this point, there are a multitude of additional adjustments at issue that remain to be decided and will affect the tax computations. While it seems obvious that the increased wage income and the corresponding reduction in pass-through income that resulted will directly offset, it is better left for conclusion of the case when Rule 155 computations are submitted to the Court. It is both premature and wasteful of judicial resources to have hearings over the calculation of the tax impact of each individual adjustment to income, when many times adjustments are interrelated. For the foregoing reasons, we will deny Petitioners' Motion for Partial Summary Judgment, as supplemented and as modified by the parties settlement of issues. Petitioners will be afforded full opportunity to renew any computational objections at the conclusion of this matter under the parameters set forth in Rule 155.
After due consideration, and for cause, it is
ORDERED that Petitioners' Status Report filed on October 27, 2021, is retitled as "First Supplement to Petitioners' February 1, 2021, Motion for Partial Summary Judgment." It is further
ORDERED that the First Stipulation of Settled Issues filed on October 21, 2021, is hereby stricken from the record in this case. It is further
ORDERED that Petitioners' Motion for Partial Summary Judgment filed on February 1, 2021, as supplemented, is denied as moot insofar as it relates to the settled issues and without prejudice as to the computational issue.