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that a taxpayer conducts through one or more entities (other than
pass through entities)."10 Sec. 1.469-4T(b)(2)(ii)(B), Temporary
Income Tax Regs., 54 Fed. Reg. 20543 (May 12, 1989). Accordingly,
petitioners maintain:
It is abundantly clear that Proposed Regulation sec.
1.469-4 was not intended to, and in fact did not change
the rule from the * * * Temporary Regulations that a
taxpayer's activities did not include those conducted
through a C corporation. Consequently, it is clear that
under Proposed Regulation sec. 1.469-4, the self rented
property rule does not apply to the rental of property to
a C corporation.
Petitioners' proposed regulation argument is founded upon the
transitional relief set forth in section 1.469-11(b)(1), Income Tax
Regs., which, as applicable herein, permits petitioners to
determine their tax liability for 1993 and 1994 using the rules set
forth in the proposed regulations promulgated in 1992 (rather than
the final regulations). As previously stated, these proposed
10 At trial, petitioners introduced over respondent's
objection a multitude of Internal Revenue Service internal
documents and memoranda purporting to show intent on the part of
the drafters of sec. 1.469-4, Proposed Income Tax Regs., 57 Fed.
Reg. 20802 (May 15, 1992), to maintain the exclusion on
attribution of activities from C corporations. We find these
documents to be of little probative value inasmuch as they do not
state the final position of either the Commissioner or the
Secretary. See Connecticut Gen. Life Ins. Co. v. Commissioner,
109 T.C. 100, 110 (1997), affd. 177 F.3d 136 (3d Cir. 1999).
Normally, such internal memoranda are not binding on the
Secretary and cannot be used to determine intent. See id. at
109-111 (observing that material from administrative work files
generally reflects only personal views of various Government
representatives, not official statements of the Commissioner or
the Secretary); Armco, Inc. v. Commissioner, 87 T.C. 865, 867-868
(1986).
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