Opinion
4823-21
08-23-2024
COMPUTER SCIENCES CORPORATION, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber, Judge.
With respect to petitioner's Federal income tax for its fiscal year ending March 29, 2013, the Internal Revenue Service (IRS or respondent) determined a deficiency of $276,535,161 and an accuracy-related penalty of $45,584,000. This case involves three issues: (1) whether petitioner may deduct a capital loss in the amount of $651,200,000; (2) whether petitioner may deduct expenses in the amount of $146,130,000 under section 162; and (3) whether petitioner is liable for an accuracy-related penalty with respect to the capital loss issue.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
On August 16, 2024, the parties jointly filed a Motion to Bifurcate, requesting that we address the capital loss issue and accuracy-related penalty in an initial trial session (Phase 1), and defer the deduction issue to a later trial session (Phase 2). See Rule 141(b). The parties concurrently filed a Motion to Calendar, requesting that Phase 1 of the trial begin April 28, 2025. However, the courtroom in Washington, D.C. is unavailable that week.
On August 22, 2024, the undersigned held a conference call with the parties to discuss alternative dates. During that call it was agreed that Phase 1 of the trial will begin Monday, May 5, 2025. Although the parties were hopeful that Phase 1 can be concluded in one week, we have reserved the courtroom for a two-week session ending May 16, 2025, if necessary to complete the proceedings.
The parties shall file within 30 days a joint status report proposing a pretrial schedule for Phase 1 of the trial. The proposal should make explicit (if that is the parties' intent) that the proposed deadlines for discovery, expert witness reports, etc., apply only to the matters relevant to the issues to be tried during Phase 1.
In consideration of the foregoing, it is
ORDERED that parties' Motion to Bifurcate, filed August 16, 2024, is granted in that the issues to be addressed at the special two-week trial session commencing May 5, 2025, will be limited to the following:
(1) Whether petitioner may deduct a capital loss in the amount of $651,200,000; and
(2) If the first question is answered in the negative, whether petitioner is liable for an accuracy-related penalty under section 6662(a). It is further
ORDERED that the parties' Motion to Calendar, filed August 16, 2024, is granted in that Phase 1 of the trial is calendared for a two-week special session of the Court commencing at 10:00 a.m. on May 5, 2025, 3rd floor, Center Courtroom, 400 Second Street NW, Washington, D.C. 20217. The undersigned will be presiding. It is further
ORDERED that, on or before September 23, 2024, the parties shall file a joint status report proposing a pre-trial schedule for Phase 1 of the trial.
This Order constitutes official notice of its contents to the parties.