Lone Star Life Insurance Company - Page 13

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          respondent and petitioner, and notice of the same to Hibiscus,              
          within the meaning of the final sentence of section 1.1502-77(a),           
          Income Tax Regs.  Respondent contends in the alternative that,              
          regardless of the applicability of section 1.1502-77(a), Income             
          Tax Regs., the Court should conclude that the period of                     
          limitations did not expire in this case on the grounds that:                
          (1) The disputed Forms 872 should be enforced to the extent they            
          reflect the parties' mutual assent to extend the period of                  
          limitations; and (2) petitioner subsequently ratified the Forms             
          872 executed on behalf of Hibiscus.                                         
               Relying on cases such as Barbados #7 Ltd. v. Commissioner,             
          92 T.C. 804 (1989); Halper v. Commissioner, T.C. Memo. 1997-58;             
          and Malone & Hyde, Inc. v. Commissioner, T.C. Memo. 1992-661,               
          petitioner counters that respondent's reliance on the parties'              
          mutual assent and/or the doctrine of ratification is misplaced.             
          Petitioner, in its written statement filed subsequent to the                
          hearing herein, states:                                                     
                    Respondent's arguments as to mutual assent and                    
               ratification are based upon the intent of the parties.                 
               That is, respondent asserts that the consents were                     
               intended to extend the period of limitations for the                   
               separate tax liabilities of both members of the                        
               Hibiscus consolidated group, that Hibiscus' authority                  
               was not disavowed by petitioner, and that the actions                  
               of Hibiscus and petitioner taken upon the assumption                   
               that the necessary authority existed amount to                         
               ratification of the consents.  However, the issue                      
               presented by the instant motions is not one of intent,                 
               but instead is whether Hibiscus at the time of its                     
               execution of the consents was vested with the authority                
               to do so.  Petitioner submits that as a result of                      




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