T.C. Memo. 2002-257
UNITED STATES TAX COURT
DIETER STUSSY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4088-02. Filed October 8, 2002.
Dieter Stussy, pro se.
Angelique M. Neal, for respondent.
MEMORANDUM OPINION
GOLDBERG, Special Trial Judge: This matter is before the
Court on Respondent’s Motion To Strike Portions Of The Petition,
filed pursuant to Rule 52.1 The issue raised by the motion is
whether portions of petitioner’s attachment to his petition
1
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year at issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
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should be stricken as frivolous, immaterial, nonjusticiable,
and/or incomprehensible, and as violating the requirements of
Rule 34(b)(5).2 A hearing was conducted in Los Angeles,
California. At the hearing, petitioner orally moved to have the
case dismissed for lack of jurisdiction, asserting that the
notice of deficiency is invalid. At the conclusion of the
hearing, the Court took both motions under advisement.
Background
Respondent determined a deficiency in petitioner’s Federal
income tax for the taxable year 1998 in the amount of $2,983.
The cover page of the notice of deficiency shows a deficiency
amount of $2,938 for the 1998 taxable year. However, all of the
information contained in the explanatory statements accompanying
the notice shows the computation of the deficiency amount of
$2,983. Respondent simply made a $45 typographical error on the
face of the notice, resulting from the transposition of the last
two digits in the deficiency amount.
The notice of deficiency included the following documents:
(1) A cover letter titled “Notice of Deficiency”; (2) a Form 870,
Waiver of Restrictions on Assessment and Collection of Deficiency
in Tax and Acceptance of Overassessment (Waiver Statement); (3) a
Form 4089-A, Notice of Deficiency Statement; (4) a Form 5278,
2
Petitioner’s attachment to his petition is made a part of
the petition.
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Statement-–Income Tax Changes; (5) a statement titled
“Explanation of Adjustments”; and (6) a statement titled “1998-
Schedule A-Itemized Deductions”.
In the Explanation of Adjustments, respondent described in
detail the following adjustments made to petitioner’s 1998 tax
return: (1) Contributions of $2,306.78 deducted on Schedule A
were disallowed for lack of substantiation; (2) miscellaneous
other expenses of $2,700.27 deducted on Schedule A were
disallowed for lack of substantiation, failure to establish that
the expense was ordinary and necessary, and failure to establish
that the expense qualifies as a miscellaneous other expense
pursuant to the Internal Revenue Code (Code); (3) other
miscellaneous deductions of $4,074.36 for section 691 expense
deducted on Schedule A were disallowed for lack of substantiation
and failure to establish that the expense qualifies as an other
miscellaneous deduction pursuant to the Code; and (4) interest
expense of $4,665.21 deducted on Schedule C was disallowed for
lack of substantiation, failure to establish that the expense was
ordinary and necessary, and failure to establish that the expense
qualifies as interest pursuant to the Code.
On the Statement–-Income Tax Changes, respondent increased
petitioner’s taxable income by the disallowed amounts described
above and revised petitioner’s taxable income for the year at
issue. In accordance with the revised taxable income, respondent
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determined an increase in petitioner’s income tax of $2,983. The
increased income tax amount of $2,983 was also reflected on the
Waiver Statement and the Notice of Deficiency Statement.
Petitioner filed a petition with the Court, attaching an 8-
page statement that included a “detailed explanation of
disagreement” with respondent’s determinations and a request for
a finding that the notice of deficiency is invalid on its face.
Respondent filed a Motion To Strike Portions Of The
Petition, requesting the Court to strike various sentences in
paragraphs 1 through 7 of petitioner’s statement attached to the
petition. Respondent asserts that the language sought to be
stricken in the petition is not proper, does not comply with the
Rules, and makes frivolous, vague, and immaterial allegations and
assertions with no factual basis.
Petitioner’s Opposition To Respondent’s Motion To Strike
Portions Of The Petition was filed claiming respondent’s motion
has no merit. Petitioner claims that each paragraph in the
petition contains a clear and concise assignment of error
committed by respondent. Further, petitioner contends that
respondent misinterprets Rule 34(b) to require that “each and
every sentence of the petition be enumerated” and asserts that
respondent moves to strike portions of the petition solely on
that misunderstanding.
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Discussion
1. Petitioner’s Oral Motion To Dismiss for Lack of Jurisdiction
We first consider petitioner’s oral motion to dismiss for
lack of jurisdiction due to an invalid notice of deficiency. If
we sustain petitioner’s motion, finding the notice to be invalid,
the Court will lack jurisdiction to hear this case and
respondent’s motion to strike will become moot. Accordingly, the
Court’s jurisdiction over this matter is resolved initially.
The United States Tax Court is a court of limited
jurisdiction. See sec. 7442. Under section 6213(a), the Court
has jurisdiction to redetermine deficiencies determined by the
Commissioner. The Court’s jurisdiction over deficiency
proceedings is contingent upon the issuance of a valid notice of
deficiency and a timely filed petition. See Rule 13(a), (c);
DaBoul v. Commissioner, 429 F.2d 38 (9th Cir. 1970); Monge v.
Commissioner, 93 T.C. 22, 27 (1989). “Thus, a valid notice of
deficiency and a timely petition are essential to our deficiency
jurisdiction, and we must dismiss any case in which one or the
other is not present.” Monge v. Commissioner, supra at 27.
A notice of deficiency is intended to serve two purposes.
Frieling v. Commissioner, 81 T.C. 42, 53 (1983). It is intended
to notify a taxpayer that a deficiency has been determined
against the taxpayer and provide the taxpayer with the
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opportunity to petition this Court for a redetermination of that
deficiency. Id.
In Scar v. Commissioner, 814 F.2d 1363, 1368 (9th Cir.
1987), revg. 81 T.C. 855 (1983), the Court of Appeals for the
Ninth Circuit held that respondent must consider information
relating to a particular taxpayer before respondent can be said
to have determined a deficiency with respect to that taxpayer.
For purposes of determining whether the notice of deficiency
provides sufficient information to apprise the taxpayer that the
Commissioner has determined a deficiency in tax, a notice of
deficiency includes the cover page and all attached pages and
documents. Smith v. Commissioner, T.C. Memo. 1979-16.
If a notice of deficiency otherwise fulfills its purpose, we
have held that a mathematical error in the notice will not
invalidate the notice where the taxpayer is not misled by the
error. See Myers v. Commissioner, T.C. Memo. 1981-84; see also
Smith v. Commissioner, supra.
Despite a trivial transposition error on the cover page of
the notice of deficiency, petitioner was adequately informed of
the income tax and issues in controversy by the notice of
deficiency. The petition indicates that petitioner was not
misled by the transposition error; rather, petitioner was fully
aware of the typographical error’s existence. The notice of
deficiency was not misleading and put petitioner on notice that
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respondent had determined a deficiency in his Federal income tax
for the year at issue. We attach no credence to petitioner’s
argument that he was misled by such an insignificant error.
Petitioner cites Scar v. Commissioner, supra, and Foster v.
Commissioner, 80 T.C. 34 (1983), affd. in part and vacated in
part 756 F.2d 1430 (9th Cir. 1985), for the proposition that a
“[single] deficiency must be found” for the notice of deficiency
to be valid. Petitioner’s interpretation of both of these cases
is misplaced.
In Scar, the taxpayers received a notice of deficiency that
disallowed a loss deduction from a partnership in which the
taxpayers owned no interest. Further, the notice computed a tax
due using the highest marginal tax rate at the time. In
considering whether the notice of deficiency was valid, the Court
of Appeals for the Ninth Circuit held that a notice of deficiency
is invalid if it is clear from the notice itself that the
Commissioner had not reviewed the taxpayers’ return or otherwise
made a determination of a deficiency with respect to the
taxpayers’ liability for the particular taxable year. Scar v.
Commissioner, supra at 1370.
The courts applying Scar have limited the rule established
in the case to its specific facts. See Kantor v. Commissioner,
998 F.2d 1514, 1521-1522 (9th Cir. 1993), affg. in part and revg.
in part T.C. Memo. 1990-380; Clapp v. Commissioner, 875 F.2d
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1396, 1402 (9th Cir. 1989). Simply stated, the rule set forth in
Scar applies in the narrow set of circumstances where the notice
of deficiency on its face reveals that respondent failed to make
a determination. See Campbell v. Commissioner, 90 T.C. 110, 112-
113 (1988).
Here the facts are in no way analogous to the facts in Scar.
Respondent did review petitioner’s 1998 tax return and made
adjustments to petitioner’s Schedule A and Schedule C. Based on
those adjustments, respondent determined a deficiency in tax for
the tax year at issue. The transposition error on the cover page
does not affect the validity of the notice.
Furthermore, the holding in Foster is inapplicable here and
does not stand for the proposition asserted by petitioner. See
Foster v. Commissioner, supra.
Additionally, petitioner cites Wilson v. Commissioner, T.C.
Memo. 1997-515, and Violette v. Commissioner, T.C. Memo. 1994-
173, for the proposition that a “typographical error in a
critical place” on the notice of deficiency is sufficient to
invalidate the notice. Petitioner’s interpretation incorrectly
broadens the holding in each case to encompass all typographical
errors. The error in each of those cases was in the address to
which the deficiency notice was mailed and was deemed sufficient
to affect delivery of the notice. The facts in each case are
therefore easily distinguishable from the facts here.
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We find the transposition error in the notice of deficiency
to be inconsequential and hold that the notice of deficiency is
valid. Consequently, we deny petitioner’s oral motion to dismiss
for lack of jurisdiction.
2. Respondent’s Motion To Strike Portions of the Petition
Pursuant to Rule 52, respondent moves to strike various
portions of the petition as frivolous, vague, and immaterial
allegations and assertions with no factual basis. Pages 2 and 3
of respondent’s motion identify the specific portions of the
petition which respondent seeks to strike. We need not detail
each specific statement sought to be stricken as petitioner was
properly served and is aware of respondent’s position.
Under Rule 52, this Court, upon timely motion by a party or
upon the Court’s own initiative at any time, may order stricken
from any pleading any insufficient claim or defense or any
redundant, immaterial, impertinent, frivolous, or scandalous
matter.
A motion to strike matter from a pleading will be granted
only if the moving party establishes (1) that the matter has no
possible bearing upon the subject matter of the litigation, and
(2) that prejudice will result to the moving party if the motion
is not granted. Estate of Jephson v. Commissioner, 81 T.C. 999,
1001 (1983).
A petition must contain (1) clear and concise assignments of
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each and every error which the petitioner alleges to have been
committed by the Commissioner in the determination of the
deficiency, and (2) clear and concise lettered statements of the
facts on which petitioner bases the assignments of error. Rule
34(b)(4) and (5).
The portions of the petition which respondent seeks to
strike include various code sections, regulations, public laws, a
revenue ruling, and several cases from this Court and other
Federal courts. In addition, the petition includes petitioner’s
opinions, arguments, legal theories, and conclusions.
We have read the petition and find that the matter which
respondent seeks to strike from the petition has no possible
bearing upon the subject matter of the litigation. The
objectionable material does not contain assignments of errors or
statements of facts as required by the Rules. See Rule 34(b)(4)
and (5). The language used is immaterial and impertinent to a
properly pled petition.
Petitioner is not prejudiced in any way by striking this
language. With the language stricken, any justiciable assignment
of error or statement of fact on which petitioner relies remains
in the petition. Additionally, petitioner is free to raise legal
arguments, cite authority, and draw conclusions therefrom at the
proper time. Striking the matter from the petition is warranted
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by Rules 34, 40, and 52. Cf. Ballantine v. Commissioner, 74 T.C.
516 (1980).
Accordingly, respondent’s motion to strike the language from
the petition will be granted, and our order will specify what
portions of the petition are to be stricken.
To reflect the foregoing,
An appropriate order will
be issued.