Opinion
8427-14 8548-14, 18494-15 18521-15 18721-15 18745-15 18797-15 18799-15
04-24-2024
WILLIAM E. FRAZIER & MARY A. FRAZIER, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
RICHARD T. MORRISON JUDGE
On January 8, 2024, the Court issued a Memorandum Findings of Fact and Opinion (T.C. Memo. 2024-3).
On April 3, 2024, the parties filed a Motion for Reconsideration of Findings or Opinion Pursuant to Rule 161, requesting the following revisions:
(1) Page 14, numbered paragraph 7, should be revised to read as follows: In OPINION Part VII, we hold that the Fraziers received $957,397 $24,425 in Schedule E income, $1,545 in ordinary dividends, and $4,636 in qualified dividends in 2012.
(2) Pages 145-146, OPINION Part VII (and the corresponding Table of Contents entry on page 7), should be revised to read as follows:
VII. The Fraziers received $957,397 $24,425 in Schedule E income, $1,545 in ordinary dividends, and $4,636 in qualified dividends for 2012.
For 2012, for several types of income, the amounts to which the parties stipulated are greater than the amounts in the notices of deficiency:
For Schedule E income "related to rental real estate, royalties, partnerships, S corporations, trusts, etc.," the $957,397 amount that the parties stipulated is greater than the total amount of Schedule E income determined in the notices of deficiency, $933,880.
For ordinary dividends, the $1,545 amount that the parties stipulated is greater than the total amount of ordinary dividends determined in the notices of deficiency, $1,364.
For qualified dividends, the $4,636 amount that the parties stipulated is $6 greater than the total amount of qualified dividends determined in the notices of deficiency, $4,630.
For these types of income, except as provided below, we hold that the amounts in the stipulations are the correct amounts that the Fraziers received. We generally hold parties to their stipulations under Rule 91(e).
Although this could result in determining a deficiency greater than that determined in the notices of deficiency, we believe that by stipulating to amounts greater than the amounts determined in the notices of deficiency, the parties have tried these issues by consent. Section 6214(a) provides that the Tax Court has jurisdiction to redetermine the correct amount of deficiency even if the redetermined amount is greater than the amount originally determined in the notice of deficiency, as long as the greater amount was asserted by the IRS before or during trial. The IRS is considered to have asserted a claim for a greater deficiency if the parties try the issue by consent under Rule 41(b)(1), even if the IRS does not raise the issue in the notice of deficiency or in pleadings. Smaldino, T.C. Memo. 2021-127, at *16.
Although the parties stipulated that the Fraziers had Schedule E income for 2012 in the amount of $957,397, we noted in OPINION Part II B.4 that this amount includes the $932,972 distributive share of Louisiana Assisted's nonseparately stated income for that year, and we concluded that this $932,972 amount is not includible in the Frazier's income, consistent with our determination in OPINION Part I that LHDC, and not William, is a member of Louisiana Assisted. This Court may disregard a stipulation between parties if the evidence contrary to the stipulation is substantial or the stipulation is clearly contrary to facts disclosed by the record. See Loftin & Woodard, Inc. v. United States, 577 F.2d 1206, 1232 (5th Cir. 1978); Jasionowski v. Commissioner, 66 T.C. 312, 317-18 (1976). Accordingly, we conclude that the Fraziers received $24,425 in Schedule E income for 2012.
(3) Page 154, footnote 71: the reference to Schedule E income of $957,397 should instead be $24,425.
We will grant the motion, strike the Memorandum Findings of Fact and Opinion, and file a corrected Memorandum Findings of Fact and Opinion incorporating the changes above.
On April 5, 2024, respondent filed a Motion for Extension of Time to File Rule 155 computations. We will grant this motion.
Accordingly, it is
ORDERED that the parties' April 3, 2024 Motion for Reconsideration of Findings or Opinion Pursuant to Rule 161 is granted. It is further
ORDERED that the Memorandum Findings of Fact and Opinion, filed January 8, 2024, is stricken from the record. It is further
ORDERED that the Clerk of the Court shall serve on the parties the Corrected Memorandum Findings of Fact and Opinion, which reflects the following revisions:
(1) Page 14, numbered paragraph 7, is revised to:
In OPINION Part VII, we hold that the Fraziers received $24,425 in Schedule E income, $1,545 in ordinary dividends, and $4,636 in qualified dividends in 2012.
(2) Pages 145-146, OPINION Part VII (and the corresponding Table of Contents entry on page 7), is revised as follows:
VII. The Fraziers received $24,425 in Schedule E income, $1,545 in ordinary dividends, and $4,636 in qualified dividends for 2012.
For 2012, for several types of income, the amounts to which the parties stipulated are greater than the amounts in the notices of deficiency:
• For Schedule E income "related to rental real estate, royalties, partnerships, S corporations, trusts, etc.," the $957,397 amount that the parties stipulated is greater than the total amount of Schedule E income determined in the notices of deficiency, $933,880.
• For ordinary dividends, the $1,545 amount that the parties stipulated is greater than the total amount of ordinary dividends determined in the notices of deficiency, $1,364.
• For qualified dividends, the $4,636 amount that the parties stipulated is $6 greater than the total amount of qualified dividends determined in the notices of deficiency, $4,630.
For these types of income, except as stated below, we hold that the amounts in the stipulations are the correct amounts that the Fraziers received. We generally hold parties to their stipulations under Rule 91(e).
Although this could result in determining a deficiency greater than that determined in the notices of deficiency, we believe that by stipulating to amounts greater than the amounts determined in the notices of deficiency, the parties have tried these issues by consent. Section 6214(a) provides that the Tax Court has jurisdiction to redetermine the correct amount of deficiency even if the redetermined amount is greater than the amount originally determined in the notice of deficiency, as long as the greater amount was asserted by the IRS before or during trial. The IRS is considered to have asserted a claim for a greater deficiency if the parties try the issue by consent under Rule 41(b)(1), even if the IRS does not raise the issue in the notice of deficiency or in pleadings. Smaldino, T.C. Memo. 2021-127, at *16.
Although the parties stipulated that the Fraziers had Schedule E income for 2012 of $957,397, we noted in OPINION Part II B.4 that this amount includes the $932,972 distributive share of Louisiana Assisted's nonseparately stated income for that year, and we concluded that this $932,972 amount is not includible in the Fraziers' income, consistent with our determination in OPINION Part I that LHDC, and not William, is a member of Louisiana Assisted. This Court may disregard a stipulation between parties if the evidence contrary to the stipulation is substantial or the stipulation is clearly contrary to facts disclosed by the record. See Loftin & Woodard, Inc. v. United States, 577 F.2d 1206, 1232 (5th Cir. 1978); Jasionowski v. Commissioner, 66 T.C. 312, 317-18 (1976). Accordingly, we conclude that the Fraziers received $24,425 in Schedule E income for 2012.
(3) Page 154, footnote 71: the reference to Schedule E income of $957,397 is revised to $24,425.
ORDERED that the Memorandum Findings of Fact and Opinion in all other respects remains unchanged. It is further
ORDERED that respondent's April 5, 2024 Motion for Extension of Time is granted and the date on which the parties shall file Rule 155 computations is extended to July 23, 2024.