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License Agreement. Mr. Speer provided services to Pioneer during
the years in issue and was compensated for his services by
Pioneer. Based on the totality of the facts presented, we find
that Mr. Speer was acting on behalf of Pioneer when he signed the
License Agreement.
The License Agreement served a valid business purpose and
was approved by independent, unrelated shareholders. Despite
respondent’s assertion that Mr. Speer made the business decisions
and essentially controlled HSN, HSC, and Pioneer, respondent has
not argued that we should disregard the corporations as separate,
viable taxable entities, nor do we find any basis for doing so.
There is no evidence that Mr. Speer or his son, Richard,
personally received the license fees paid by HSN to Pioneer.
Pioneer actually received the license payments and included them
in its income for Federal income tax purposes.9 Any benefit that
9Pioneer is now barred by the statute of limitations from
claiming a refund for the taxable years 1985 through 1987.
Petitioners have asserted the affirmative defense of equitable
recoupment in the event this Court upholds respondent’s
determination that the license payments should be recharacterized
as constructive dividends from HSN to Mr. Speer followed by a
gift to his son, Richard M. Speer. The doctrine of equitable
recoupment prevents unjust enrichment and may be invoked by a
taxpayer to recover taxes erroneously collected from the same
taxpayer or one with a sufficient identity of interest, where the
refund of such erroneously collected taxes is otherwise barred by
the statute of limitations. Stone v. White, 301 U.S. 532 (1937);
Estate of Mueller v. Commissioner, 101 T.C. 551 (1993).
Petitioners contend that respondent is seeking to subject the
license payments to multiple taxes based on inconsistent legal
theories (i.e., gross income to Pioneer and a constructive
dividend followed by a gift). Moreover, respondent has asserted
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