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Respondent maintains that petitioner did not have reasonable
cause for the failure to pay on time because (1) the invalidity
of the section 6166 election was due to Hinz’s attempt to
delegate a nondelegable duty to Christy, (2) petitioner has
failed to show that the estate’s assets were largely illiquid,
and thus petitioner has failed to show undue hardship, and (3)
“Petitioner misstates fact when he states that the IRS ‘did not
initially reject the section 6166 election.’”
We agree with petitioner’s conclusion.
Before we analyze the section 6651(a)(2) reasonable cause
requirements as applied to the facts of the instant case, we are
impelled to note the following with respect to the parties’
erroneous statements.
We have found that, by letter dated March 30, 1994,
respondent informed Hinz that respondent was tentatively allowing
petitioner’s section 6166 election. Not until a letter dated
February 6, 1995, did respondent inform Hinz that petitioner’s
section 6166 election was invalid because it was untimely. Thus
(a) respondent errs in denying that respondent did not initially
reject the section 6166 election–-for about 10 months, petitioner
operated under respondent’s tentative acceptance of the election;
and (b) petitioner errs in asserting that the IRS did not inform
petitioner of the election’s denial until September 30, 1996–-
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