- 9 -
the fraud penalties. See United States v. Bolt, supra at 726.
In a subsequent action to resolve a dispute over the proper
computation of interest on the deficiency and fraud penalties,
the Court of Appeals rejected the taxpayer’s argument that the
original assessment made by the Commissioner had been invalidated
as a result of the reversal and remand.8 See id. The Court of
Appeals held that the reversal and remand did not “vitiate the
assessment” for purposes of section 7486. Id.
In Denison v. Commissioner, T.C. Memo. 1981-738, the Tax
Court sustained the Commissioner’s deficiency determination
because the taxpayer failed to show that the determination was
erroneous. The taxpayer appealed but did not post a bond, and
the Commissioner assessed the deficiency. The Court of Appeals
for the Eighth Circuit reversed and remanded for further
proceedings with instructions to require the Commissioner to
produce evidence establishing the reasonableness of its
determination. See Denison v. Barlow, 689 F.2d 771, 773 (8th
Cir. 1982). The taxpayer then filed an action in District Court
seeking declaratory and injunctive relief against the
Commissioner’s efforts to collect the assessment. The District
8The taxpayer in United States v. Bolt, 375 F.2d 725 (6th
Cir. 1967), appears to have been arguing that the reversal and
remand of the Tax Court’s first decision invalidated the original
assessment made by the Commissioner and that this, in turn,
affected the amount of interest due on the deficiency and fraud
penalties as finally determined on remand.
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