- 15 -
regulation (and particularly the language quoted above) as a
legal bar to the reinstatement of an agency relationship between
Hibiscus and petitioner. In other words, while the final
sentence of section 1.1502-77(a), Income Tax Regs., provides that
a subsidiary member of a consolidated group shall have full
authority to act for itself, the provision does not preclude a
subsidiary from allowing its parent to continue to act as its
agent.
Consistent with the foregoing, it follows that the cases
that petitioner relies upon, cases in which the ostensible agent
lacked the legal capacity to continue to act as an agent, are
inapposite. See Barbados #7 Ltd. v. Commissioner, supra
(TMP/agent's authority terminated upon bankruptcy); Halper v.
Commissioner, supra (agent's authority terminated as consequence
of principal's mental incapacity); Malone & Hyde, Inc. v.
Commissioner, supra (agent's authority terminated upon merger of
corporation/principal with another corporation).
We are satisfied that the undisputed facts demonstrate that
the consents in dispute are valid and binding on petitioner based
upon the theories of mutual assent or ratification. Consistent
with Gary Powers' testimony on the point, petitioner does not
dispute that the consents were executed with the intent of
extending the period of limitations for the Hibiscus consolidated
group. Moreover, Gary Powers' dual role as treasurer for
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011