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required Bauman’s periodic attention. Petitioners’ Federal
income tax return for 1981 was not received by the IRS until June
30, 1983. The record does not contain an explanation for the
tardiness of petitioners’ return for taxable year 1981.
Background
During the taxable years at issue,3 Bauman was a limited
partner in ERL. In 1980, ERL, as lessee, entered into a lease
agreement with JAD Coal Co., Inc. (JAD), as lessor, to mine and
market coal underlying certain land in Harlan County, Kentucky.
This lease transaction was the subject of this Court’s opinion in
Bauman v. Commissioner, T.C. Memo. 1988-122 (occasionally Bauman
I).4 In Bauman I, this Court held that ERL’s royalty obligations
under its lease agreement with JAD were not “substantially
uniform” and were not “paid at least annually”. As such, we
further held that the royalty obligations were not deductible as
advance royalties paid or accrued “as a result of a minimum
royalty provision” under section 1.612-3(b), Income Tax Regs.
The Court granted respondent’s motion for partial summary
judgment with respect to this minimum royalty issue. Bauman I,
however, was limited to the question of whether the royalty
obligations qualified under a minimum royalty provision as
3The parties have reached settlement with respect to taxable
year 1979. The issues before the Court pertain to taxable years
1980, 1981, and 1982.
4The parties in Bauman v. Commissioner, T.C. Memo. 1988-122,
are identical to the parties in the instant case.
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