110 T.C. No. 32
UNITED STATES TAX COURT
ESTATE OF ROBERT W. QUICK, DECEASED, ESTHER P. QUICK,
PERSONAL REPRESENTATIVE, AND ESTHER P. QUICK, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 8588-97. Filed June 29, 1998.
Ps filed a Motion for Reconsideration of our
Opinion reported as Estate of Quick v. Commissioner,
110 T.C. 172 (1998). Among other things, Ps argue that
our failure therein to order refunds for overpayments
of tax for Ps' 1989 and 1990 tax years stemming from
the "proper" computational adjustments which R should
have made for those years, as well as refunds for
overpayments for their 1987 and 1988 tax years
attributable to NOL carrybacks from 1989 and 1990, was
erroneous. Held: Ps' Motion for Reconsideration is
denied; this Court has jurisdiction to determine
overpayments of tax, if any, attributable to affected
items as part of a decision of this case (sec.
6512(b)(1), I.R.C.; Woody v. Commissioner, 95 T.C. 193,
206, 209 (1990), followed); this Court lacks
* This opinion supplements our previously filed Opinion in
Estate of Quick v. Commissioner, 110 T.C. 172 (1998).
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jurisdiction to order credits or refunds of
overpayments except with respect to overpayments
determined by final decision as authorized by sec.
6512(b)(2), I.R.C.
Kevin M. Bagley and Mitchell B. Dubick, for petitioners.
Gretchen A. Kindel, for respondent.
SUPPLEMENTAL OPINION
NIMS, Judge: In a timely filed Motion for Reconsideration
(Motion) pursuant to Rule 161, petitioners request the Court to
reconsider its Opinion reported as Estate of Quick v.
Commissioner, 110 T.C. 172 (1998). The Opinion is incorporated
herein by this reference.
Except where otherwise noted, all Rule references are to the
Tax Court Rules of Practice and Procedure. All section
references are to sections of the Internal Revenue Code in effect
for the years in issue.
In our Opinion, we held, among other things, that
respondent's recharacterization of petitioners' distributive
share of partnership losses for 1989 and 1990 as passive for
purposes of section 469 (the section 469 issue) constituted an
"affected item" within the meaning of section 6231(a)(5), and was
thereby subject to the Tax Equity and Fiscal Responsibility Act
of 1982 (TEFRA), Pub. L. 97-248, sec. 402(a), 96 Stat. 324, 648,
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codified at sections 6221 through 6233. Estate of Quick v.
Commissioner, supra at 187-189.
In their Motion, petitioners allege that our conclusion that
the section 469 issue is an affected item within the meaning of
section 6231(a)(5) and accompanying regulations is incorrect as a
matter of law. Petitioner's Motion further alleges that, even if
the section 469 issue is an affected item, the Court nevertheless
should have ordered respondent to refund overpayments of taxes
paid for 1989 and 1990, as well as overpayments for 1987 and
1988, based on the "proper" computational adjustments to
petitioners' returns which respondent should have made after the
conclusion of the partnership level proceeding. Lastly,
petitioners' Motion alleges that we inconsistently decided that
the section 469 issue constitutes an affected item for 1989 and
1990 but is not an affected item for 1987 and 1988. Respondent
has filed an objection to petitioners' Motion, together with a
supporting memorandum of law.
Reconsideration under Rule 161 serves the limited purpose of
correcting substantial errors of fact or law and allows the
introduction of newly discovered evidence that the moving party
could not have introduced, by the exercise of due diligence, in
the prior proceeding. Westbrook v. Commissioner, 68 F.3d 868,
879-880 (5th Cir. 1995), affg. per curiam T.C. Memo. 1993-634;
see Lucky Stores, Inc. v. Commissioner, T.C. Memo. 1997-70;
Estate of Scanlan v. Commissioner, T.C. Memo. 1996-414. The
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granting of a motion for reconsideration rests with the
discretion of the Court, and we usually do not exercise our
discretion absent a showing of unusual circumstances or
substantial error. CWT Farms, Inc. v. Commissioner, 79 T.C.
1054, 1057 (1982), affd. 755 F.2d 790 (11th Cir. 1985).
Reconsideration is not the appropriate forum for rehashing
previously rejected legal arguments or tendering new legal
theories to reach the end result desired by the moving party.
Stoody v. Commissioner, 67 T.C. 643, 644 (1977); Estate of
Scanlan v. Commissioner, supra.
Petitioners' argument that the section 469 issue cannot be
an affected item for purposes of the applicability of TEFRA's
audit and litigation provisions was raised previously and
received thorough consideration by this Court. Estate of Quick
v. Commissioner, supra. Petitioners' Motion does not evince any
unusual circumstances or substantial error with respect to this
issue. We therefore decline to reconsider this issue or to
elaborate on it any further. See Stoody v. Commissioner, supra
at 644.
Petitioners next contend that, even if the section 469 issue
is an affected item requiring partner level factual
determinations, the Court erred in failing to order refunds for
overpayments of taxes paid for 1989 and 1990, as well as refunds
for overpayments for 1987 and 1988 resulting from net operating
loss carrybacks from 1989 and 1990. In petitioners' view,
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respondent simply should have increased the amount of
petitioners' distributive share of partnership losses flowing
from the favorable adjustments at the partnership level for 1989
and 1990. Instead, respondent recharacterized petitioners'
distributive share of the adjusted partnership losses (as well as
petitioners' share of partnership losses previously reported on
their returns for those years) as passive in notices of
computational adjustment issued for 1989 and 1990, resulting in
deficiencies. However, as an affected item requiring partner
level factual determinations, the recharacterization of such
losses was not properly subject to computational adjustment.
Sec. 6230(a)(2)(A)(i); see Estate of Quick v. Commissioner,
supra.
Respondent argues that this Court correctly declined to
order refunds for overpayments of tax in our Opinion. We agree,
but for the sake of clarity, we deem it necessary to discuss our
rationale in greater detail than we did previously.
The Tax Court is a court of limited jurisdiction, and we may
exercise our jurisdiction only to the extent authorized by
Congress. See sec. 7442; Judge v. Commissioner, 88 T.C. 1175,
1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529
(1985). We have jurisdiction to decide whether we have
jurisdiction. Pyo v. Commissioner, 83 T.C. 626, 632 (1984).
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Our jurisdiction to determine overpayments of tax is
provided by section 6512(b). Judge v. Commissioner, supra at
1182. Section 6512(b) provides:
(b) Overpayment Determined by Tax Court.--
(1) Jurisdiction to determine.--Except as provided
by paragraph (3) and by section 7463, if the Tax Court
finds that there is no deficiency and further finds
that the taxpayer has made an overpayment of income tax
for the same taxable year * * * in respect of which the
Secretary determined the deficiency, or finds that
there is a deficiency but that the taxpayer has made an
overpayment of such tax, the Tax Court shall have
jurisdiction to determine the amount of such
overpayment, and such amount shall, when the decision
of the Tax Court has become final, be credited or
refunded to the taxpayer.
Section 6512(b)(2) confers jurisdiction to order refunds of
overpayments determined by this Court "after 120 days after a
decision * * * has become final."
Respondent, by virtue of having challenged petitioners'
characterization of their distributive share of adjusted
partnership losses for 1989 and 1990, has effectively transmuted
what otherwise would have been unquestionably a partnership item,
i.e., the amount of losses in petitioners' hands, into an
affected item requiring partner level factual determinations.
Sec. 6231(a)(3); sec. 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin.
Regs. Having concluded that the section 469 issue is an affected
item subject to deficiency proceedings under section
6230(a)(2)(A)(i), it follows that we have jurisdiction to
determine any overpayments attributable thereto in this partner
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level proceeding. See, e.g., Woody v. Commissioner, 95 T.C. 193,
206 (1990). However, the determination of any overpayments must
be included as part of the decision in this case after a trial on
the merits. See sec. 6512(b)(3); Estate of Quick v.
Commissioner, supra at 189. Pursuant to section 6512(b)(1),
petitioners would be entitled to a credit or refund of any
overpayment that we may determine only when the decision becomes
final. Further, pursuant to section 6512(b)(2), we may order the
refund of any overpayment included in a decision only if the
refund remains unpaid for 120 days after the date the decision
becomes final.
In response to petitioners' argument, even if the
adjustments to the amounts of their distributive share of
partnership losses for 1989 and 1990 were somehow separable from
respondent's challenge to the characterization of those losses
under section 469, and were therefore subject to computational
adjustment, which they are not, we lack jurisdiction under
section 6512(b) to determine any overpayments of tax attributable
to computational items at any stage of this proceeding. Woody v.
Commissioner, supra at 206. It follows that we also lack the
authority to order the credit or refund of overpayments
attributable to such computational items.
Lastly, petitioners' argument that the Court failed to treat
the section 469 issue consistently for all years before the Court
is unavailing. We did not conclude that the characterization of
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petitioners' share of losses is an affected item for 1989 and
1990, but is not an affected item for 1987 and 1988. Nor did we
state that whether or not an item is an affected item depends
solely on whether respondent "elects" to challenge it through an
affected items deficiency proceeding. We simply held that "the
characterization of losses as either passive or nonpassive in the
hands of a partner is an affected item under section 469".
Estate of Quick v. Commissioner, supra at 188.
Respondent did not challenge petitioners' characterization
of their proportionate share of partnership losses for 1987 and
1988, and thus the affected items deficiency procedures were not
required to be followed for those years. Rather, adjustments to
the amounts of petitioners' distributive share of partnership
losses in those years were properly made by respondent pursuant
to notices of computational adjustment upon the conclusion of the
partnership level proceeding. Sec. 6230(a)(1). It is only
because respondent challenged the characterization of losses for
1989 and 1990, necessitating partner level factual
determinations, that affected items deficiency procedures apply
to those years. Sec. 6230(a)(2)(A)(i).
In sum, respondent cannot, as petitioners contend,
arbitrarily "elect" to make the section 469 issue an affected
item for certain years but not for others. However, respondent
is free to challenge a taxpayer's characterization of his share
of partnership losses via the affected items deficiency
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proceedings in any year for which the period of limitations is
open.
We have considered each of the remaining arguments of the
parties and to the extent that they are not discussed herein,
find them to be either not germane or unconvincing.
For the above reasons,
An appropriate order
denying petitioners' motion for
reconsideration will be issued.