Estate of Harry Orenstein - Page 17




                                       - 17 -                                         
               limited jurisdiction and lacks general equitable                       
               powers,” Commissioner v. McCoy, 484 U.S. 3, 7, 108                     
               S.Ct. 217, 219, 98 L.Ed.2d 2 (1987) * * * Taken in                     
               context, the Supreme Court’s pronouncement means that                  
               the Tax Court has no equitable power to expand its                     
               statutorily prescribed jurisdiction.  This is quite                    
               distinct from saying that the Tax Court has no                         
               equitable powers in cases properly brought before it.                  
               * * *                                                                  
                    Although of limited jurisdiction, the Tax Court                   
               must have the power to consider an equitable estoppel                  
               claim, if considering the claim is necessary to the                    
               appropriate disposition of the case before it. * * *                   
                    If the Tax Court lacked authority to entertain a                  
               claim of equitable estoppel, taxpayers with such a                     
               claim would no longer have a choice of fora for their                  
               tax issues.  They would effectively be forced to pay                   
               their taxes and sue for a refund, submitting all of                    
               their claims to the district courts.  Taxpayers would                  
               then be barred by res judicata from relitigating a                     
               claim in the Tax Court.  Thus, taxpayers would                         
               essentially be denied the right to challenge                           
               deficiencies in the Tax Court if they wanted to assert                 
               an equitable estoppel claim.  This would be an unfair                  
               choice to pose to taxpayers, and would undermine the                   
               purpose of the Tax Court.  We therefore conclude that                  
               the Tax Court did have jurisdiction over the Bokums’                   
               equitable estoppel claim.  [Bokum v. Commissioner,                     
               supra at 1140-1141; citations and fn. ref. omitted.]                   
               Hence, since an identical unfairness with respect to choice            
          of fora flows from a denial of authority to hear an equitable               
          recoupment defense, we believe it unlikely that the Court of                
          Appeals for the Eleventh Circuit would summarily reject                     
          petitioners’ claim on the basis of Continental Equities, Inc. v.            
          Commissioner, supra.  We therefore decline to do so.  In                    
          accordance with the precedent established by this Court in Estate           
          of Branson v. Commissioner, supra, Estate of Bartels v.                     






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