- 14 -
election that was attached to EMFI's Form 1120S for the fiscal
year ended October 31, 1993. Instead, respondent's determination
disregards the lack of a filed election, asserts that EMFI
substantially complied with the election requirements, and,
therefore, asserts that EMFI has in fact made the election under
section 1368(e)(3). This is the first instance we are aware of
in which we have been asked to find, under the doctrine of
substantial compliance, that a taxpayer is bound by an election
where no election statement was filed, and the taxpayer refuses
to file such election.6
Respondent argues that it would be unfair to apply the
doctrine of substantial compliance so that only taxpayers may use
it. We need not decide the issue of whether the doctrine of
substantial compliance may never be used to force a taxpayer to
be bound by an election where the taxpayer substantially complied
with the requirements to make the election. Instead, for several
reasons, we do not believe that the facts of this case warrant an
application of the doctrine of substantial compliance to require
6In Brody v. Commissioner, T.C. Memo. 1975-47, the taxpayer
argued that S corporation status may not be elected by filing an
S corporation return instead of the form prescribed by the
regulations. Relying on the fact that the returns filed were S
corporation returns, the Commissioner determined that the
corporation had elected to be taxed under subchapter S. In
sustaining the Commissioner's determination, we relied almost
exclusively on the taxpayers' failure to meet their burden of
proof. See Rockwell Inn, Ltd. v. Commissioner, T.C. Memo. 1993-
158.
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