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In the current case there is no evidence of intentional mischief by petitioner, and-in the realities of the business world-56 days (including weekends and holidays), particularly in the absence of a due date provided by respondent, is but a blink. Herein, I would conclude that the petition is timely.

FOLEY, J., dissenting: In section 3463(a) of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, 112 Stat. 685, 767, Congress provided: "The Secretary of the Treasury or the Secretary's delegate shall include on each notice of deficiency ** the date determined by such Secretary (or delegate) as the last day on which the taxpayer may file a petition with the Tax Court." Congress further provided that the date determined by the Internal Revenue Service (IRS) would establish the deadline for filing a petition with this Court. Section 3463(b) of RRA 1998 amends section 6213(a) by adding the following thereto: "Any petition filed with the Tax Court on or before the last date specified for filing such petition by the Secretary in the notice of deficiency shall be treated as timely filed." The majority concludes that "Because the last date for filing a timely Tax Court petition was not specified by the deficiency notice in this case, the petition could not be filed on or before any such date", majority op. p. 362, and that "the last sentence of section 6213(a) * * * does not operate in the instant case", majority op. p. 363. I disagree.

The plain language of the statute provides that the IRS must determine a date; this date may establish a deadline that is later than the statutorily prescribed 90-day period; and petitions filed on or before the deadline established by the IRS shall be treated as timely filed. Respondent's failure to provide any specified date is tantamount to providing that there is no deadline. Accordingly, the petition is timely.

The majority asserts that "Respondent's position finds further support in the legislative history". Majority op. p. 362. Again, I disagree. Assuming arguendo that the statute is not clear on its face, the legislative history, on the contrary, bolsters petitioner's contention. In setting forth the rationale for the amendment to section 6213(a), the Senate Finance

Committee report (report) states: "The Committee believes that taxpayers should receive assistance in determining the time period within which they must file a petition in the Tax Court and that taxpayers should be able to rely on the computation of that period by the IRS." S. Rept. 105-174, at 90 (1998), 1998-3 C.B. 537, 626 (emphasis added). Focusing on the statement that "taxpayers should be able to rely on the computation of that period by the IRS", the majority emphasizes that petitioner did not contend that he detrimentally relied on the information in the notice and that the theory of detrimental reliance is not applicable in this case because no misleading information was provided. I agree that the theory of detrimental reliance is not applicable. Neither the statute nor the legislative history imposes such a requirement. While the report provides that "taxpayers should be able to rely on the computation of that period by the IRS", the report does not require a taxpayer to establish detrimental reliance.

Moreover, I believe the IRS provided misleading information to petitioner. While the text of the notice states that "you have 90 days from the above mailing date of this letter

* to file a petition", the space in the upper right corner of the notice, entitled "Last Day to File a Petition With the United States Tax Court", is blank. This notice is more confusing than notices issued under prior law and creates the type of confusion that Congress intended to remedy.

The IRS made a mistake and did not follow the congressional mandate, and, as a result, the petition should, pursuant to section 6213(a), be treated as timely filed. The majority's holding is contrary to the statute and legislative history. In essence, it allows the IRS to circumvent the congressional mandate. That is an unreasonable interpretation of the statute. Accordingly, I respectfully dissent.

COLVIN, J., agrees with this dissenting opinion.

DAVID J. LYCHUK AND MARY K. LYCHUK, ET AL.,1
PETITIONERS v. COMMISSIONER OF INTERNAL

REVENUE, RESPONDENT

Docket Nos. 11794-99, 11855-99,

11863-99.

Filed May 31, 2001.

A acquires and services multiyear installment contracts as its sole business operations. A acquires each contract at 65 percent of its face value and is entitled to all principal and interest payments. A's employees perform various credit review services in order to decide whether to acquire each contract offered to A and, as to the contracts which A chooses to acquire, perform additional services in paying the sellers. R determined that all of A's salaries, benefits, and overhead (printing, telephone, computer, rent, and utilities) relating to its acquisition (and not to its service) operation were capital expenditures. R also determined that A had to capitalize professional fees and commissions (collectively, offering expenditures) relating to its offering of notes in 1993 and a second offering that was planned in 1993 and abandoned in 1994. Held, the salaries and benefits are capital expenditures; A's payment of these items was directly related to its anticipated acquisitions of assets with expected useful lives exceeding 1 year. Held, further, the overhead expenses may be deducted currently under sec. 162(a), I.R.C.; A's payment of these items was not directly related to the anticipated acquisitions, and any future benefit that A received from these expenses was incidental to its payment of them. Held, further, sec. 165(a), I.R.C., allows A to deduct the portion of the capitalized salaries and benefits that was attributable to installment contracts which it never acquired; A may deduct those amounts for the respective years in which it ascertained that it would not acquire the related contracts. Held, further, A must capitalize all of the offering expenditures; A's payment of these expenditures was anticipated to provide A with significant future benefits. Held, further, sec. 165(a), I.R.C., allows A to deduct in 1994 the portion of the capitalized offering expenditures that was attributable to the abandoned offering.

Oksana O. Xenos, for petitioners.*

Eric R. Skinner, for respondent.

1 Cases of the following petitioners are consolidated herewith: Edward C. and Virginia M. Blasius, docket No. 11855-99; and James E. and Mary Jo Blasius, docket No. 11863–99.

*Briefs of amici curiae were filed by Robert A. Rudnick, B. John Williams, Jr., James F. Warren, and Richard J. Gagnon, Jr., as counsel for Federal Home Loan Mortgage Corporation (FHLMC), and by Felix B. Laughlin and Anna-Liza Harris as counsel for Federal National Mortgage Association (FNMA).

LARO, Judge: Petitioners petitioned the Court to redetermine deficiencies attributable primarily to adjustments which respondent made to their income from a subchapter S corporation, Automotive Credit Corp. (ACC). Respondent determined a $1,202 deficiency in the 1993 Federal income tax of David J. and Mary K. Lychuk. Respondent determined $2,149 and $11,461 deficiencies in the 1993 and 1994 Federal income taxes, respectively, of Edward C. and Virginia M. Blasius. Respondent determined $23,683 and $89,609 deficiencies in the 1993 and 1994 Federal income taxes, respectively, of James E. and Mary Jo Blasius.2 Both Blasius couples alleged in their respective petitions that they had an overpayment for 1994 on account of costs which ACC failed to deduct for that year.

Following concessions, we must decide whether ACC must capitalize certain expenditures made during 1993 and 1994. The expenditures were generally ACC's payment of (1) salaries, benefits, and overhead (printing, telephone, computer, rent, and utilities) relating to its acquisition of retail installment contracts (installment contracts) in the ordinary course of its business (installment contracts expenditures) and (2) professional fees and commissions relating to a private placement offering of notes that ACC accomplished in 1993 and a second offering that ACC planned in 1993 and abandoned in 1994 (collectively, PPM expenditures). We hold that ACC must capitalize both groups of expenditures to the extent described herein. We must also decide whether ACC may deduct the portion of the capitalized installment contracts expenditures relating to installment contracts which it never acquired. We hold it may deduct that portion under section 165(a).3 We must also decide whether ACC may deduct the portion of the PPM expenditures relating to the abandoned offering. We hold it may deduct that portion for 1994 under section 165(a).

FINDINGS OF FACT

The parties have stipulated many of the facts. We incorporate herein the parties' stipulation of facts and the exhibits submitted therewith. We find the stipulated facts accord

2 James Blasius is Edward Blasius' son.

3 Unless otherwise indicated, section references are to the Internal Revenue Code applicable to the relevant years. Rule references are to the Tax Court Rules of Practice and Procedure.

ingly. Each petitioning couple is a husband and wife who resided in Michigan when their petition was filed. Each petitioning couple filed a joint Federal income tax return for the relevant years.

ACC is a cash method taxpayer that was incorporated in 1992 and elected shortly thereafter to be taxed as an S corporation for Federal income tax purposes. It was formed to provide alternate financing for purchasers of used automobiles or light trucks (collectively, automobiles) who have marginal credit. Its sole business operation is (1) the acquisition of installment contracts from automobile dealers (dealers) who have sold automobiles to high credit risk individuals and (2) the servicing of those contracts. Its primary business activities are credit investigation, credit evaluation, documentation, and the monitoring of collections on installment contracts. Its business is conducted out of space that it rents in Bingham Farms, Michigan, pursuant to a 5-year lease that began on October 22, 1992. Under the lease, ACC pays monthly rent of $3,137.50 during the first 24 months and $3,250 afterwards.

ACC's shareholders and their respective ownership interests are as follows:

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None of the shareholders, except James Blasius, works in ACC's daily business. The other male shareholders serve as the directors of ACC's board.

ACC's key management personnel includes its president, James Blasius, its vice president and chief financial officer, Steven Balan, its credit manager, Cass Budzynowski, and its credit investigator, Hope McGee. During the relevant years, each of these individuals performed services in connection with ACC's acquisition of installment contracts. James Blasius managed ACC's overall operation and handled personally all contracts with dealers. Steven Balan supervised and oversaw ACC's day-to-day management and its financial and general office management. Cass Budzynowski analyzed credit applications and supervised credit investigations. Hope

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