- 15 -
We disagree. The fact that the Secretary did not re-prescribe
that exception as part of the 1992 proposed regulations is
persuasive evidence that he revoked the exception at that time.
See Keppel v. Tiffin Sav. Bank, 197 U.S. 356, 373 (1905) ("it
cannot in reason be said that the omission * * * gives rise to
the implication that it was the intention of Congress to reenact
it."); Independent Ins. Agents of Am., Inc. v. Clarke, 955 F.2d
731, 735 (D.C. Cir. 1992) (“Under traditional rules of statutory
construction, * * * material omitted on reenactment is deemed
repealed.”), revd. on other grounds sub nom. United States Natl.
Bank v. Independent Ins. Agents of Am., Inc., 508 U.S. 439
(1993). See generally Singer, Sutherland Statutory Construction,
sec. 23.28, at 413 (5th ed. 1993). As we observed in Schwalbach
v. Commissioner, 111 T.C. 215, 228 (1998): “Although the * * *
[1992 proposed regulations were] silent on this rule, including
whether the Commissioner was considering abandoning it, we read
nothing in * * * [those] regulations that would lead us to
believe that the Commissioner was proposing to retain the rule.”
The facts of Schwalbach v. Commissioner, supra, are similar
to the facts at bar. There, the taxpayers challenged the
Commissioner’s application of the recharacterization rule to
income they had realized in 1994 on their rental of property to a
corporation owned by 2 shareholders, one of whom was one of the
taxpayers. The taxpayers argued primarily that the
recharacterization rule was invalid because the Secretary did not
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011