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II. Retroactivity of Respondent’s Revocation of
the Prior Favorable Ruling Letter Issued to Petitioner
Petitioner contends that it was improper for respondent to
revoke the prior favorable ruling letter retroactively to June
11, 1984, the date on which petitioner entered into the Contract.
Petitioner contends that the retroactivity of the revocation (1)
violates its Fifth Amendment due process rights and (2)
constitutes an abuse of respondent’s discretion under section
7805(b). Petitioner’s constitutional arguments were considered
and dealt with in United Cancer Council, Inc. v. Commissioner,
100 T.C. 162 (1993), and in the hearing that preceded that
opinion. Petitioner asks the Court “to reconsider our previously
detailed arguments, and we also note our preservation of the
issues in the event of an appeal.” We believe that our earlier
rulings in this matter were correct and that there is no need to
restate them. We proceed to consider the abuse-of-discretion
issue under section 7805(b).28
28 Sec. 7805(b) provides as follows:
SEC. 7805. RULES AND REGULATIONS.
* * * * * * *
(b) Retroactivity of Regulations or Rulings.--The
Secretary may prescribe the extent, if any, to which any
ruling or regulation, relating to the internal revenue laws,
shall be applied without retroactive effect.
This provision was extensively revised by sec. 1101(a) of the
Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1452,
1468 (1996), effective for regulations which relate to statutory
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