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the taxpayers relied on an understated corporate earned surplus
figure, as shown by an audit of certified public accountants, in
making an election to liquidate under section 112(b)(7) of the
Internal Revenue Code of 1939, and the actual earned surplus
figure was more than 10 times the figure relied on. Under these
circumstances, the Court of Appeals for the Fifth Circuit held
that the election could be withdrawn on the ground that it was
based on a material mistake of fact. Meyer's Estate v.
Commissioner, 200 F.2d at 596-597.
While this Court has not adopted the reasoning of Meyer's
Estate v. Commissioner, 200 F.2d at 592 (see Johnson v.
Commissioner, T.C. Memo. 1991-645, affd. without published
opinion 989 F.2d 484 (1st Cir. 1993)), an appeal in this case
lies to the Court of Appeals for the Eleventh Circuit in which
Meyer's Estate is precedent.12 Nonetheless, if petitioners are
to be allowed to make elections at this time in reliance upon
Meyer's Estate, they must establish that their original elections
were based upon a material mistake of fact and not a mistake of
law. Rule 142(a); Bankers & Farmers Life Ins. Co. v. United
States, 643 F.2d 234 (5th Cir. 1981). It is one thing to allege
simply that there was a mistake in regarding the Conti losses as
12 As expressed in Bonner v. City of Prichard, 661 F.2d
1206, 1209 (11th Cir. 1981), the Court of Appeals for the
Eleventh Circuit follows precedent of those cases decided by the
Court of Appeals for the Fifth Circuit prior to September 30,
1981.
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