making or bringing a “levy or proceeding in court" against an individual making an election under section 6015. The provision does not expressly prohibit the Commissioner from filing a Federal tax lien against such an individual. Considering that section 6015(e)(1)(B)(i) specifically precludes the Commissioner from proceeding with a levy against an individual claiming relief under section 6015, we think that same provision would have included express language barring the Commissioner from filing a Federal tax lien against such an individual if Congress intended to prohibit such actions.7 In addition, we see no indication that the term "proceeding in court" as set forth in section 6015(e)(1)(B)(i) was intended to refer to the filing of a Federal tax lien. In short, the plain and ordinary meaning of the term "proceeding in court" suggests the filing of a formal lawsuit or complaint by the Government against an individual as opposed to the more informal administrative procedures employed by the Commissioner in the filing of a Federal tax lien.8 See, e.g., 2 Administration, Internal Revenue Manual (CCH), sec. 5.12.1.14.1, at 16,829. Thus, we hold that respondent was not prohibited from filing the Federal tax lien in dispute under section 6015. Inasmuch as the petition in this case was filed as a petition for lien or levy action, we must also consider whether sections 6320 and 6330 barred respondent from filing the Federal tax lien against petitioner. Sections 6320 and 6323 authorize the Commissioner to file a notice of Federal tax lien before notifying the taxpayer of his or her right to request an administrative hearing with regard to the lien. The record reflects that respondent complied with these provisions. We also observe that there is no provision in section 6320 or 6330 that prohibits the Commissioner from fil 7 See Trent v. Commissioner, T.C. Memo. 2002-285 (holding that the Commissioner was not barred by sec. 6330(e)(1)(B) from offsetting the taxpayer's overpayments for later years against an earlier tax liability for which the taxpayer had claimed relief under sec. 6015). 8 Respondent has adopted the following definition of the term "proceeding in court". Sec. 1.6015-7(c)(4)(ii), Income Tax Regs., provides: (ii) Proceedings in court. For purposes of this paragraph (c), proceedings in court means suits filed by the United States for the collection of Federal tax. Proceedings in court does not refer to the filing of pleadings and claims and other participation by the Internal Revenue Service or the United States in suits not filed by the United States, including Tax Court cases, refund suits, and bankruptcy cases. ing a Federal tax lien against a person who has pending a claim for relief under section 6015. Consistent with the preceding discussion, and considering the provisions of sections 6320, 6330, and 6015 together, we hold that Congress did not prohibit the Commissioner from filing a Federal tax lien against a taxpayer while such taxpayer has pending a claim for relief from joint and several liability under section 6015. Congress did, however, bar the Commissioner from levying on such taxpayer's property during the prohibited period. Sec. 6015(e)(1)(B)(i). Respondent conceded the latter point in the notice of determination issued to petitioner. There being no other issue for consideration, we shall grant respondent's motion for summary judgment. To reflect the foregoing, An appropriate order and decision for respondent will be entered. THE CHARLES SCHWAB CORPORATION AND SUBSIDIARIES, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket Nos. 16903-98, 18095-98. Filed March 9, 2004. P, for Federal tax reporting purposes, claimed a California franchise tax deduction for 1989. Subsequently, P claimed the 1989 deduction for an earlier year and was successful in that claim in prior litigation before this Court. For purposes of these cases, P claims entitlement to franchise tax deductions for 1989 in the amount originally deducted for 1990. In like manner, P claims the franchise tax deductions originally claimed for 1993, 1992, and 1991 are now deductible for the preceding years of 1992, 1991, and 1990, respectively. R contends that sec. 461(d), I.R.C., proscribes such deductions because they are based on 1972 California legislation that provided for the acceleration of the accrual date for said taxes. P contends that sec. 461(d), I.R.C., does not proscribe its franchise tax deductions so long as California's 1972 legislation does not result in a double franchise tax deduction for 1989 and/or later years. P, a discount stock brokerage, purchased all of the stock of a smaller discount stock brokerage and elected to allocate the purchase price amongst the assets of the acquired brokerage. P valued the customer accounts acquired in the stock purchase and amortized them. R con tends that P's acquired discount brokerage customer accounts Glenn A. Smith, Erin M. Collins, Laurence J. Bardoff, and Patricia J. Galvin, for petitioner. Rebecca T. Hill, for respondent. GERBER, Judge: Respondent, in these consolidated cases,1 determined deficiencies in petitioner's2 1989, 1990, 1991, and 1992 income taxes of $2,245,332, $2,797,349, $3,101,526, and $827,683, respectively. By means of amended answers, respondent asserts increased income tax deficiencies of $2,644,782, $2,906,015, $3,210,191, and $936,349 for petitioner's tax years 1989, 1990, 1991, and 1992, respectively.3 The issues presented for our consideration are: (1) Whether section 461(d)4 proscribes certain California franchise tax deductions petitioner claims; (2) whether petitioner's acquired discount stock brokerage customer accounts may be amortized; (3) if the customer accounts may be amortized, whether petitioner has established their fair market value; (4) whether petitioner has shown the "useful lives" of 1 These cases have been consolidated for purposes of trial, briefing, and opinion. Docket No. 16903-98 pertains to petitioner's 1989, 1990, and 1991 tax years, and docket No. 18095-98 pertains to petitioner's 1992 tax year. 2 The use of "petitioner" relates to the three entities that make up the consolidated group. 3 In the amended answers, respondent asserted increased deficiencies attributable to the franchise tax issue and the amortization of intangibles. For 1989, respondent made no determination with respect to the franchise tax deduction petitioner claimed. After the notice of deficiency was issued, petitioner was successful in claiming the amount originally claimed in 1989 in its short year ended Dec. 31, 1988. Accordingly, respondent asserts an increased deficiency to account for petitioner's change in position. As to the amortization of intangibles, respondent originally determined that petitioner was entitled to some amortization. Respondent changed his position in the amended answer, denying petitioner any amortization and asserting increased deficiencies. 4 Section references are to the Internal Revenue Code in effect for the periods under consideration. Rule references are to the Tax Court Rules of Practice and Procedure. certain customer accounts for purposes of amortization; and (5) alternatively, if petitioner is unsuccessful regarding issues (2), (3), and (4), whether petitioner is entitled to an abandonment loss equal to the value of the acquired intangibles it abandoned after the business acquisition. FINDINGS OF FACT5 Petitioner comprises three corporations that file consolidated Federal corporate income tax returns. The group consists of the Charles Schwab Corp., a Delaware corporation, its first-tier subsidiary, Schwab Holdings, Inc., a Delaware corporation, and its second-tier operating subsidiary, Charles Schwab & Co., Inc., a California corporation. At the time of the filing of the petitions in these consolidated cases, petitioner's principal office was in San Francisco, California. Petitioner provides discount securities brokerage and related financial services, primarily to individuals, throughout the United States and is a member of all major U.S. securities exchanges. During the years under consideration, the principal service petitioner provided was to execute trade orders to facilitate sales and purchases of stock and securities on behalf of customers. Petitioner's business strategy was to serve self-directed customers who either did not require research, investment advice, or portfolio management or did not desire to pay higher commissions to cover the costs of those services. For Federal income tax purposes, petitioner reports income and deductions under the accrual method of accounting and has adopted the "recurring item exception” under section 461(h)(3). On February 9, 1987, petitioner qualified to do business in California and on April 1, 1987, began operations. Petitioner used a calendar year for California franchise tax purposes. Petitioner's first tax year for Federal income tax purposes ended on March 31, 1988. In its second and successive years, petitioner's tax year for Federal income tax purposes was changed to the calendar year. 5 The parties' stipulations of fact are incorporated by this reference. Over the period from March 2000 through October 2002, the parties entered into six stipulations of fact with exhibits, all of which have been received into evidence. Petitioner's California franchise tax liabilities were originally deducted on its Federal corporate income tax returns in the following manner: Petitioner, on its Federal corporate income tax return for the short (9-month) year ended December 31, 1988, did not claim a California franchise tax deduction. In Charles Schwab Corp. & Includable Subs. v. Commissioner, 107 T.C. 282 (1996) (Schwab I), affd. on another issue 161 F.3d 1231 (9th Cir. 1998), cert. denied 528 U.S. 822 (1999), petitioner claimed that the $932,979 originally deducted on its 1989 calendar year return was deductible for its short year ended December 31, 1988. This Court held that petitioner was entitled to deduct the $932,979 for its short year ended December 31, 1988. Id. That holding left petitioner unable to deduct the $932,979 for its calendar year 1989, as it had on its original 1989 corporate return. For purposes of this Federal tax litigation, petitioner now claims to be entitled to deduct California franchise tax liabilities for the same taxable period for which the franchise tax was calculated; i.e., the year prior to the year for which petitioner originally deducted the California franchise tax on its Federal tax returns. The following schedule reflects the years and amounts for which petitioner originally claimed California franchise tax deductions, and the years and amounts for which petitioner claims deductions for purposes of this litigation: |