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Equitable estoppel2 is a judicial doctrine that precludes a
party from denying that party's own acts or representations which
induced another to act to his or her detriment. See Hofstetter v.
Commissioner, 98 T.C. 695, 700 (1992). The doctrine of equitable
estoppel is applied against the Government only with utmost caution
and restraint. See, e.g., Kronish v. Commissioner, 90 T.C. 684,
695 (1988). The burden of proof is on the party claiming estoppel
against the Government. See Rule 142(a); Hofstetter v.
Commissioner, supra at 701.
Petitioners have failed to carry their burden. It is of no
import that the 1994 deduction for loss arising from Legal Search
was accepted by the IRS. Each tax year is a separate matter. See,
e.g., Commissioner v. Sunnen, 333 U.S. 591, 597 (1948); Harrah's
Club v. United States, 228 Ct. Cl. 650, 661 F.2d 203, 205 (1981).
Thus, petitioners' estoppel argument is without merit.
2 Taxpayers must prove at least the following elements
before courts will apply equitable estoppel against the
Government: (1) A false representation or wrongful, misleading
silence by the party against whom the estoppel is claimed; (2) an
error in a statement of fact and not in an opinion or statement
of law; (3) the taxpayer's ignorance of the true facts; (4) the
taxpayer's reasonable reliance on the acts or statements of the
one against whom estoppel is claimed; and (5) adverse effects
suffered by the taxpayer from the acts or statements of the one
against whom estoppel is being claimed. See, e.g., Norfolk S.
Corp. v. Commissioner, 104 T.C. 13, 60, supplemented by 104 T.C.
417 (1995), affd. 140 F.3d 240 (4th Cir. 1998).
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