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Subsequent to the remand of the instant case, both parties
filed separate motions. Petitioners' motion seeks summary
judgment. Petitioners contend that we may not properly consider
the issue of quasi-estoppel because quasi-estoppel is an
1(...continued)
F.2d 622, 623 (5th Cir. 1972); Crosley Corp. v. United
States, 229 F.2d 376, 380 (6th Cir. 1956); Ross v.
Commissioner, 169 F.2d 483, 496 (1st Cir. 1948)(simple
failure to report income “is not a representation that
such income has in fact not been received” and does
not, without more, furnish grounds for estoppel);
Mertens, supra, sec. 60.05 ("Where there is a mistake
of law and no factual misrepresentations, the doctrine
of consistency does not apply."). Moreover, the
misstatement must be one on which the government
reasonably relied, in the sense that it neither knew,
nor ought to have known, the true nature of the
transaction mischaracterized by the taxpayer. See
Herrington, 854 F.2d at 758; Mayfair Minerals, 456 F.2d
at 623; Ross, 169 F.2d at 495-96.
In this case, it seems possible that * * *
[petitioner] made representations of key facts
regarding the genuine business activities of * * * [the
foreign controlled corporation] throughout the 1970's
and the genuine intent on his and * * * [his partner’s]
part to repay the * * * [foreign controlled
corporation] “loans.” If such representations of fact
were made, then holding * * * [petitioner] to them now
might generate a 1984 tax liability.
We stress, however, that we are uncertain about
this matter. Since it has not been argued here, and
since factual history is at issue, both the Lewises and
the Commissioner should have a full opportunity to
argue the issue before the Tax Court. We therefore
vacate the Tax Court's judgment insofar as it is
inconsistent with this opinion. And, we remand the
case to the Tax Court for further proceedings. [Lewis
v. Commissioner, 18 F.3d 20, 26 (1st Cir. 1994),
vacating in part and remanding T.C. Memo. 1992-391.]
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