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EMFI to treat the distributions in question as distributed first
from earnings and profits.
Respondent's application of the doctrine of substantial
compliance on the facts in the instant case is not in consonance
with our previous application of the various factors used to
determine whether a taxpayer has substantially complied with the
essence of the governing statute. In Tipps v. Commissioner,
supra at 468, we stated that "the omission of the required
material has not operated to respondent’s prejudice." The
several factors in American Air Filter Co. v. Commissioner, supra
at 719, which we have used to determine whether the regulatory
requirements are "essential", may also be viewed in part as
hinging on whether the omission of such requirements harms the
IRS.7 In effect, respondent asks us to apply factors, which
heavily favor respondent's interests, to determine that
petitioners are bound by an election which, in the first place,
7In American Air Filter Co. v. Commissioner, 81 T.C. 709,
719-720 (1983), we similarly listed various factors, which we
have used in determining whether strict compliance was required
as follows: Whether the taxpayer's failure to comply fully
defeats the purpose of the statute; whether the taxpayer attempts
to benefit from hindsight by adopting a position inconsistent
with his original action or omission; whether the Commissioner is
prejudiced by the untimely election; whether the sanction imposed
on the taxpayer for the failure is excessive and out of
proportion to the default; and whether the regulation provided
with detailed specificity the manner in which an election was to
be made. See Taylor v. Commissioner, 67 T.C. 1071 (1977);
Columbia Iron & Metal Co. v. Commissioner, 61 T.C. 5 (1973);
Denman Tire & Rubber Co. v. Commissioner, 14 T.C. 706 (1950),
affd. 192 F.2d 261 (6th Cir. 1951).
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