Guillermo Baez Espinosa - Page 20

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          file, petitioner had filed no Federal income tax returns for 5              
          years.  Only after a second warning and the expiration of 3 more            
          months, during which time petitioner failed to respond, did                 
          respondent prepare substitute returns for petitioner.  Eight more           
          months passed before petitioner submitted his own returns.  We              
          see no reason to reward such tactics.                                       
               With respect to the taxable years 1990 and 1991, petitioner            
          essentially contends that section 1.874-1(b)(1), Income Tax                 
          Regs., is invalid.  Given the posture of this case, however,                
          there is no reason to delve into the validity of this new                   
          regulation.  Under the factual circumstances here the regulation            
          confers no additional rights on petitioner, and even if we were             
          to hold some portion of this regulation invalid, petitioner would           
          not prevail under our analysis of the provisions of section                 
          874(a) and the relevant case law.                                           
               There is one area of the new regulation, however, that                 
          deserves some mention.  For the 1991 taxable year, petitioner               
          submitted his return before the 16-month time limit set forth in            
          1.874-1(b)(1), Income Tax Regs., had expired, but well after                
          respondent had sent petitioner the so-called doomsday letter                
          notifying him that he was not entitled to claim any deductions              
          for that year.  As stated, however, respondent repeatedly                   
          notified petitioner of his failure to file returns prior to                 
          sending a doomsday letter.                                                  

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