Asbury v. Comm'r

T.C. Memo. 2007-53

UNITED STATES TAX COURT

LLOYD T. ASBURY, ATTORNEY AT LAW, P.A., Petitioner
v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13589-05. Filed March 6, 2007.

Lloyd T. Asbury (an officer), for petitioner.

Monica J. Miller, for respondent.

MEMORANDUM OPINION

WHALEN, Judge: This case is before the Court to

decide respondent’s motion to dismiss for lack of

jurisdiction. The substantive issues in the case involve a

notice of deficiency issued to petitioner, Lloyd T. Asbury,

Attorney At Law, P.A., in which respondent determined a
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deficiency and penalties in petitioner’s corporate income

tax for 1997. Respondent moves to dismiss the case for

lack of jurisdiction on the ground that no proper person

has petitioned this Court on petitioner’s behalf.

The petition alleges that petitioner is “an

involuntarily dissolved Florida Professional Corporation”

and that Lloyd T. Asbury is “an indigent former Florida

attorney presently incarcerated in the Florida State Prison

System”. The petition also alleges that Mr. Asbury “was

the only director and shareholder of Petitioner during its

corporate existence.” Mr. Asbury signed the petition

without a title or any indication that he signed on

petitioner’s behalf.

Respondent moves to dismiss this case for lack of

jurisdiction and has yet to answer the petition. We reject

petitioner’s assertion that respondent was required to file

the subject motion within the time specified by Rule 36(a)

of the Tax Court Rules of Practice and Procedure

(hereinafter all Rule references are to the Tax Court Rules

of Practice and Procedure). Respondent’s motion to dismiss

can be made at any time because it goes to the jurisdiction

of the Court. See, e.g., David Dung Le, M.D., Inc. v.

Commissioner, 114 T.C. 268, 269 (2000), affd. 22 Fed. Appx.
 - 3 -

837 (9th Cir. 2001); Starvest U.S., Inc. v. Commissioner,

T.C. Memo. 1999-314.

Respondent’s motion asserts that the case must be

dismissed because it “was not brought by a party with

the capacity to engage in litigation in this Court.”

Respondent’s motion notes that, pursuant to Rule 60(c),

the capacity of a corporation to engage in litigation in

this Court is determined in accordance with the law of the

State in which the corporation was organized. According

to respondent’s motion, under Florida law, “only a

licensed attorney may represent a corporation in court.”

Respondent’s motion points out that Mr. Asbury was not a

licensed attorney when he filed the instant petition and,

thus, he “lacked the capacity to file such action pursuant

to T.C. Rule 60.”

In a supplement to petitioner’s notice of objection,

Mr. Asbury asserts, on petitioner’s behalf, that petitioner

was incorporated in the State of Florida in 1986 and was

administratively dissolved in 2002 for failure to file its

corporate annual report and to pay the necessary fees to

renew its corporate charter. According to Mr. Asbury,

during petitioner’s existence, he was its “only officer

(president, secretary and treasurer)” and he signed all

corporate documents in that capacity. Mr. Asbury cites
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Rule 60(c) and asserts that under Florida law, an

administratively dissolved corporation is not precluded

from bringing an action in its corporate name. He claims

authority to represent petitioner, pursuant to Rule 24(b),

as petitioner’s only corporate officer.

Respondent’s reply to the supplement to petitioner’s

notice of objection does not deny any of the facts alleged

by petitioner. Respondent’s reply also makes it plain that

it is not petitioner’s status as an administratively

dissolved Florida corporation that is the basis for

respondent’s position that the instant petition must be

dismissed for lack of jurisdiction. Respondent concedes

that “petitioner is entitled to bring this action” on the

basis of Fla. Stat. Ann. secs. 607.1405 and 607.1421 (West

2001). Those provisions of the Florida Statutes, according

to respondent, “allow administratively dissolved

corporations to carry on or defend an action in their

corporate name.”

Respondent’s position is that petitioner, as

represented by Mr. Asbury, did not have the capacity to

file the instant petition because Mr. Asbury was not

authorized under Florida law to file the instant petition

on petitioner’s behalf. Respondent argues that, under Rule

60(c), the capacity of a representative to litigate in this
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Court is determined under the law of the jurisdiction where

the authority is derived.

According to respondent, “Nothing in the law [of the

State of Florida] * * * grants authority to a former

officer, director, or shareholder, to represent a dissolved

corporation in a representative capacity.” Furthermore,

respondent cites a number of cases holding that “in

Florida, it is well established that only a licensed

attorney may represent a corporation in court.” Respondent

points out that Mr. Asbury is not currently licensed to

practice law in Florida or in any other jurisdiction.

Accordingly, respondent argues that Mr. Asbury “lacked the

capacity to file” the instant petition and the Court lacks

jurisdiction to consider it.

Respondent acknowledges that “Rule 24(b) allows for a

corporation to be represented by an authorized officer of

the corporation in Tax Court.” However, respondent argues

that “while Rule 24(b) allows for a corporation to be

represented by an ‘authorized officer’, it does not allow

for a dissolved corporation to be represented by a former

officer.” According to respondent, the purpose of Rule

24(b) is to limit to “officers” of the corporation, as

opposed to directors, shareholders, or other agents, the

persons who can be authorized by State law to represent the
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corporation in this Court. According to respondent:

“Mr. Asbury cannot act in a representative capacity for

petitioner” because Florida law “does not grant authority

to a former officer to represent a dissolved entity, with

exceptions not applicable here.”

Petitioner bears the burden of establishing

affirmatively all facts giving rise to our jurisdiction.

See Patz Trust v. Commissioner, 69 T.C. 497, 503 (1977);

Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Wheeler’s

Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180

(1960). Petitioner must establish that: (1) Respondent

issued to petitioner a valid notice of deficiency, and (2)

petitioner, or someone authorized to act on petitioner’s

behalf, filed a timely petition with the Court. See Rule

13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27 (1989);

Fehrs v. Commissioner, supra at 348. In order to meet this

burden, petitioner must establish that Mr. Asbury has

authority to act on petitioner’s behalf. See Natl. Comm.

to Secure Justice v. Commissioner, 27 T.C. 837, 839-840

(1957); Coca-Cola Bottling Co. v. Commissioner, 22 B.T.A.

686, 700 (1931); cf. Scenic Wonders Gallery, LLC v.

Commissioner, T.C. Memo. 2000-64. If the petition is not

filed by petitioner, or by someone lawfully authorized to

act on petitioner’s behalf, then we are without
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jurisdiction to consider it. See, e.g., Fehrs v.

Commissioner, supra at 348; Photo Art Mktg. Trust v.

Commissioner, T.C. Memo. 2000-57.

Rule 60 provides, in pertinent part, as follows:

(a) Petitioner: (1) Deficiency or Liability
Actions: A case shall be brought by and in the
name of the person against whom the Commissioner
determined the deficiency (in the case of a
notice of deficiency) * * * or by and with the
full descriptive name of the fiduciary entitled
to institute a case on behalf of such person.
See Rule 23(a)(1). A case timely brought shall
not be dismissed on the ground that it is not
properly brought on behalf of a party until a
reasonable time has been allowed after objection
for ratification by such party of the bringing
of the case; and such ratification shall have the
same effect as if the case had been properly
brought by such party. * * *

* * * * * * *

(c) Capacity: * * * The capacity of a
corporation to engage in such litigation shall be
determined by the law under which it was
organized. The capacity of a fiduciary or other
representative to litigate in the Court shall be
determined in accordance with the law of the
jurisdiction from which such person’s authority
is derived.

Rule 24(b) provides as follows:

(b) Personal Representation Without Counsel:
In the absence of appearance by counsel, a
party will be deemed to appear on the party’s
own behalf. * * * A corporation * * * may be
represented by an authorized officer of the
corporation * * *. * * * Any such person shall
state, in the initial pleading or other paper
filed by or for the party, such person’s name,
address, and telephone number, and thereafter
shall promptly notify the Clerk in writing, in
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duplicate for each docket number involving that
party, of any change in that information.

Under Rule 60(c), the capacity of a corporation to litigate

in this Court is determined by the law of the State in

which it was organized. This has been the rule in this

Court and in our predecessor, the Board of Tax Appeals,

since 1926. See Great Falls Bonding Agency, Inc. v.

Commissioner, 63 T.C. 304, 306-307 (1974).

Petitioner was organized under the laws of the State

of Florida. Therefore, petitioner’s capacity to file a

petition in this Court seeking redetermination of the tax

deficiency underlying this action is governed by the law of

the State of Florida. See Rule 60(c).

Two provisions of the Florida Statutes are pertinent

to our decision. Fla. Stat. Ann. sec. 607.1405, “Effect of

dissolution”, provides, in relevant part:

(1) A dissolved corporation continues its
corporate existence but may not carry on any
business except that appropriate to wind up and
liquidate its business and affairs, * * *

* * * * * * *

(2) Dissolution of a corporation does not:

(a) Transfer title to the corporation's
property;

* * * * * * *

(c) Subject its directors or officers
to standards of conduct different from
those prescribed in ss. 607.0801-
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607.0850 except as provided in s.
607.1421(4);

* * * * * * *

(e) Prevent commencement of a proceeding by
or against the corporation in its corporate
name;

* * * * * * *

(g) Terminate the authority of the
registered agent of the corporation.

Fla. Stat. Ann. sec. 607.1421, “Procedure for and effect of

administrative dissolution”, provides, in relevant part:

(3) A corporation administratively dissolved
continues its corporate existence but may not
carry on any business except that necessary to
wind up and liquidate its business and affairs
under s. 607.1405 and notify claimants under s.
607.1406.

(4) A director, officer, or agent of a
corporation dissolved pursuant to this section,
purporting to act on behalf of the corporation,
is personally liable for the debts, obligations,
and liabilities of the corporation arising from
such action and incurred subsequent to the
corporation’s administrative dissolution only if
he or she has actual notice of the administrative
dissolution at the time such action is taken; but
such liability shall be terminated upon the
ratification of such action by the corporation’s
board of directors or shareholders subsequent to
the reinstatement of the corporation under ss.
607.1401-607.14401.

(5) The administrative dissolution of a
corporation does not terminate the authority
of its registered agent.
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According to these provisions of the Florida Statutes,

an administratively dissolved Florida corporation continues

in existence indefinitely to wind up and liquidate its

business and affairs, and it retains the right to sue and

be sued in its own name. See Fla. Stat. Ann. sec.

607.1405(1) and (2); Ron’s Quality Towing, Inc. v. Se.

Bank, 765 So. 2d 134, 135 (Fla. Dist. Ct. App. 2000);

Cygnet Homes, Inc. v. Kaleny Ltd., Inc., 681 So. 2d 826

(Fla. Dist. Ct. App. 1996); see also Starvest U.S., Inc. v.

Commissioner, T.C. Memo. 1999-314 (“A dissolved Florida

corporation * * * continues in existence indefinitely to

the extent necessary to wind up and liquidate its business

and affairs, including the right to sue and be sued in its

own name.”).

It is undisputed that filing the instant petition for

redetermination of the deficiency and penalties determined

in petitioner’s tax for 1997 was necessary for petitioner,

an administratively dissolved Florida corporation, to wind

up and liquidate its business and affairs. Cf. Starvest

U.S., Inc. v. Commissioner, supra. The adjustment and

settlement of the tax liabilities of a corporation are

necessary steps in closing the business of the corporation.

See Field v. Commissioner, 32 T.C. 187, 204 (1959), affd.

without published opinion 286 F.2d 960 (6th Cir. 1960); Bos
 - 11 -

Lines, Inc. v. Commissioner, T.C. Memo. 1965-71, affd. 354

F.2d 830 (8th Cir. 1965).

On the basis of the above, we find that, under Florida

law, petitioner continues in existence, notwithstanding its

administrative dissolution, during the time necessary to

seek redetermination of the instant notice of deficiency in

this Court and to wind up its other business affairs. We

further find that petitioner has the legal capacity under

Florida law to file the subject petition for

redetermination and to litigate in this Court, even though

petitioner had been administratively dissolved at the time

the petition was filed. See Rule 60(c); Starvest U.S.,

Inc. v. Commissioner, supra; cf. Bloomington Transmission

Servs., Inc. v. Commissioner, 87 T.C. 586 (1986); Bared &

Cobo Co. v. Commissioner, 77 T.C. 1194 (1981); Padre Island

Thunderbird, Inc. v. Commissioner, 72 T.C. 391 (1979);

Great Falls Bonding Agency, Inc. v. Commissioner, 63 T.C.

304 (1974); Lee Enters., Inc. v. Commissioner, T.C. Memo.

1992-629; Am. Police & Fire Found., Inc. v. Commissioner,

T.C. Memo. 1981-704. Respondent does not seem to disagree

with these findings. As mentioned above, respondent

concedes that “petitioner is entitled to bring this

action”. We take this statement as respondent’s concession

that petitioner has the capacity under Rule 60(c) and the
 - 12 -

laws of the State of Florida to litigate in this Court and

to seek redetermination of the subject notice of

deficiency.

Respondent’s position that this case should be

dismissed focuses on Mr. Asbury’s authority under State

law to act as petitioner’s representative. Respondent’s

position is that the case must be dismissed because

Mr. Asbury is not authorized under Florida law to act on

petitioner’s behalf. It appears that respondent challenges

Mr. Asbury’s authority both to approve the filing of the

instant petition as an officer of petitioner and to appear

in these proceedings as petitioner’s representative.

As we view it, the issues raised by respondent’s

motion are: (1) Whether Mr. Asbury is an active and

authorized officer of petitioner under Florida law who

properly acted on petitioner’s behalf in approving the

filing of the instant petition; and (2) whether Mr. Asbury

is an “authorized officer” within the meaning of that term

in Rule 24(b) who can represent petitioner in these

proceedings without counsel.

As to the first issue, respondent argues that Florida

law does not authorize “a former officer, director or

shareholder to represent a dissolved corporation in a

representative capacity.” Contrary to respondent’s
 - 13 -

argument, the above-quoted provisions of the Florida

Statutes, which explicitly apply to a dissolved corporation

and its former officers, provide not only that the

dissolved corporation continues in existence and retains

the right to sue and be sued, but also, in effect, that the

individuals who were officers and directors of the

dissolved corporation continue in those positions and

retain the authority to act on behalf of the corporation

during the time necessary to wind up the business of the

corporation. See Fla. Stat. Ann. secs. 607.1405(2)(c),

607.1421(4). Furthermore, Florida law specifically

provides that the officers or directors of the dissolved

corporation are not subject to standards of conduct that

are different from those prescribed for officers and

directors of other corporations, except that they may be

personally liable for the corporation’s debts, obligations,

and liabilities arising from their actions. See id.

Questions about the authority of an officer of a

corporation to act for and to bind the corporation are

questions of fact to be decided under the common law of

agency. See, e.g., Trans World Travel v. Commissioner,

T.C. Memo. 2001-6; Starvest U.S., Inc. v. Commissioner,

supra. It is undisputed that Mr. Asbury was petitioner’s

only officer or director before petitioner was
 - 14 -

administratively dissolved. Since petitioner was

dissolved, Mr. Asbury has continued as petitioner’s only

officer and director, by operation of Florida law, and he

retains the authority to act on petitioner’s behalf to wind

up and liquidate petitioner’s business and affairs. See

Fla. Stat. Ann. secs. 607.1405, 607.1421. As petitioner’s

only officer or director after the dissolution, Mr. Asbury

is the only person who can act on petitioner’s behalf.

Accordingly, he is the only person who could have the

authority to approve the filing of the instant petition for

redetermination on petitioner’s behalf. See Bared & Cobo

Co. v. Commissioner, supra; Starvest U.S., Inc. v.

Commissioner, supra. We find that Mr. Asbury had the

authority to sign the petition on petitioner’s behalf. We

further find that he is an “authorized officer” for

purposes of Rule 24(b).

Respondent’s motion argues that Mr. Asbury cannot

appear on petitioner’s behalf in this Court without

counsel, as an “authorized officer” of petitioner within

the meaning of Rule 24(b). According to respondent, an

officer of a Florida corporation is not authorized by Rule

24(b) to represent the corporation in this Court unless the

officer is also an attorney who can represent the

corporation before the courts of the State of Florida.
 - 15 -

Respondent cites no authority in support of this

interpretation of Rule 24(b).

The Explanatory Note that accompanied the promulgation

of Rule 24(b) states as follows:

Par. (b) is concerned with pro se
appearances, and is the counterpart of present
T.C. Rule 3. However, Par. (b) states a rule,
not expressed in T.C. Rule 3, that a party is
deemed to appear for himself in the absence of
appearance by counsel. In such event, the Clerk
can make service of papers by directing them by
mail to the party, foreclosing any claim of
failure to serve counsel. Par. (b) goes beyond
T.C. Rule 3 in specifying the information
required of the pro se party, and expands the
provision on the persons who may act in a
representative capacity for a pro se party. [60
T.C. 1078.]

Thus, among other things, Rule 24(b) was intended to expand

the scope of former Rule 3, its counterpart, regarding the

persons who could act in a representative capacity for a

pro se party. Former Rule 3 provided in part as follows:

“A taxpayer corporation may be represented by a bona fide

officer of the corporation upon permission granted, in its

discretion, by the Court or the Division sitting.” Thus,

under former Rule 3, an officer of a corporation could

represent the corporation in this Court, but the officer

was required to obtain the permission of the Court to do

so. Rule 24(b) expanded the scope of former Rule 3 by

permitting a corporation to be represented in this Court

“by an authorized officer of the corporation”.
 - 16 -

Under respondent’s interpretation of Rule 24(b), a

corporate officer can represent the corporation only if the

officer is specifically authorized by State law to

represent the corporation in litigation conducted in the

courts of that State. This would be a contraction of the

former Rule, not an expansion.

Contrary to respondent’s interpretation, Rule 24(b)

allows an “authorized officer” of a corporation, such as

Mr. Asbury, to represent the corporation in this Court

“without counsel”. This is an exception to the usual rule

in Federal courts under which corporations are required to

be represented in court by a duly licensed attorney. See,

e.g., Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory

Counsel, 506 U.S. 194, 202-203 (1993). Rule 24(b) does not

require an officer to be specifically permitted to

represent the corporation in State court. See House v.

Commissioner, 24 Fed. Appx. 608, 609 (7th Cir. 2001) (“At

trial House proceeded pro se and also elected to appear on

JJH’s [Joseph J. House, Inc.’s] behalf, as the tax court

rules permit him to do, see Tax Court Rule 24(b).”), affg.

T.C. Memo. 2000-22 (Illinois corporation); People Place

Auto Hand Carwash, LLC v. Commissioner, 126 T.C. 359, 360

n.2 (2006) (Tennessee limited liability company); WFO Corp.

v. Commissioner, T.C. Memo. 2004-186 (Ohio corporation);
 - 17 -

Oliver Family Found. v. Commissioner, T.C. Memo. 1997-220

(Nevada nonprofit corporation).

Upon consideration of the foregoing,

An appropriate order

will be issued denying

respondent’s motion.