T.C. Memo. 1998-210
UNITED STATES TAX COURT
HANNA & ASSOCIATES, P.C.,
FORMERLY MARK J. HANNA, P.C., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10734-97. Filed June 16, 1998.
Charles F. Daily, Jr., for petitioner.
Steven B. Bass, for respondent.
MEMORANDUM OPINION
PARR, Judge: This case is before the Court on respondent's
motion to dismiss for lack of jurisdiction filed on June 30,
1997,1 pursuant to Rule 53.2 The issue for decision is whether
1
On August 25, 1997, respondent filed an amendment to
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petitioner lacks capacity under Rule 60(c) to invoke this Court's
jurisdiction.
Background
Hanna & Associates, P.C., formerly Mark J. Hanna, P.C. was a
corporation organized under the laws of the State of Texas. On
February 2, 1994, Mark J. Hanna, petitioner's sole shareholder,
adopted a resolution to dissolve the corporation. On February
24, 1994, petitioner filed a certificate of dissolution with the
Texas secretary of state resulting in petitioner's dissolution
pursuant to Tex. Bus. Corp. Act Ann. art. 6.06 (West 1994).
Petitioner's 1993 and 1994 Federal income tax returns were
filed on March 15, 1994, and September 18, 1995, respectively.
On February 26, 1997, respondent issued a notice of
deficiency to petitioner determining deficiencies in and
penalties on petitioner's Federal income taxes as follows:
Penalties
Year Deficiency Sec. 6662(a)
1993 $31,450 $6,290
1994 13,474 2,695
1
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respondent's motion to dismiss for lack of jurisdiction, arguing
on alternative grounds that petitioner lacks capacity to invoke
this Court's jurisdiction. Since we find for respondent based on
the original motion to dismiss, respondent's alternative argument
raised in the amended motion is moot.
2
All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
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On May 27, 1997, Charles F. Daily, Jr., as counsel for
petitioner, filed a petition with this Court in the name of
petitioner.
On June 30, 1997, respondent filed a motion to dismiss for
lack of jurisdiction on the ground that, because petitioner was
dissolved more than 3 years prior to the filing of the petition
herein, under Texas State law petitioner now lacks capacity to
invoke this Court's jurisdiction. On July 22, 1997, petitioner
filed an objection to respondent's motion to dismiss on the
ground that the notice of deficiency was invalid, because it was
issued more than 3 years after the deadline of the dissolution of
the corporation.
Respondent's motion was calendared for hearing in San
Antonio, Texas. Counsel for respondent appeared at the hearing
and presented arguments on the pending motion. Petitioner's
attorney did not appear for the hearing, nor were any written
statements of petitioner's position filed with the Court as
provided for pursuant to Rule 50(c).
Discussion
Rule 60(c) states that the capacity of a corporation to
engage in litigation in this Court shall be determined by the law
under which the corporation was organized. Brannon's of Shawnee,
Inc. v. Commissioner, 71 T.C. 108, 111 (1978); Condo v.
Commissioner, 69 T.C. 149, 151 (1977); Great Falls Bonding
Agency, Inc. v. Commissioner, 63 T.C. 304, 305 (1974). Because
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petitioner was organized in the State of Texas, we look to the
law of that State to determine whether petitioner possesses the
requisite capacity to invoke this Court's jurisdiction.
Petitioner's capacity to engage in litigation is prescribed
by Tex. Bus. Corp. Act Ann. art. 7.12 (West 1994), which provides
that a dissolved Texas corporation shall continue its corporate
existence for a period of 3 years from the date of the
dissolution, for the purpose of prosecuting or defending in its
corporate name any action or proceeding brought by or against it.
In applying Tex. Bus. Corp. Act Ann. art. 7.12 ( West 1994)
to the facts presented, we agree with respondent that the cause
of action underlying this proceeding was not commenced within 3
years of the date that petitioner was dissolved. The record
shows that petitioner dissolved on February 24, 1994. It is
clear that under Texas law petitioner's existence as extended by
statute terminated on February 24, 1997, i.e., 3 years after its
dissolution. As of that date it ceased to exist and lacked
capacity to institute any legal proceeding. Great Falls Bonding
Agency Inc., v. Commissioner, supra; Comfort Home Builders, Inc.
v. Commissioner, T.C. Memo. 1995-225. Thus, a petition filed
with this Court in petitioner's name on May 27, 1997, more than 3
years after its dissolution, cannot be entertained.
Moreover, we note that petitioner has not articulated a
sound argument in opposition to respondent's motion to dismiss
for lack of jurisdiction. Rather, petitioner maintains that
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respondent should be precluded from issuing a deficiency notice
to a dissolved corporation. As we observed in Great Falls
Bonding Agency, Inc. v. Commissioner, supra at 306:
At first blush, it does seem anomalous that
respondent would issue a statutory notice of deficiency
to a taxpayer and then turn around and say that there
is no taxpayer who can petition this Court for a
redetermination of the determined deficiency--as * * *
[respondent] has done here. Yet, section 6212(b)(1) is
explicit in its language which permits respondent, in
the absence of a notice of fiduciary relationship, to
send a notice of deficiency to a corporation which has
terminated its existence--as has the petitioner.
There being no indication that petitioner provided
respondent with a notice of a fiduciary relationship under
sections 6903 and 6212(b)(1), respondent was justified in issuing
the disputed deficiency notice directly to petitioner
notwithstanding its dissolution.
Accordingly, we grant respondent's motion to dismiss for
lack of jurisdiction on the ground that petitioner lacked
capacity under Rule 60(c) to invoke this Court's jurisdiction.
To reflect the foregoing,
An appropriate order
of dismissal for lack
of jurisdiction will
be entered.