- 17 - proper application of Federal tax law and thus is not a ministerial act. Sec. 301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987). Even if Mr. Matos simply followed his supervisor’s instructions when he ultimately applied the personal holding company provisions to KSCI and treated it as a C corporation, the decision by the supervisor to apply those provisions to KSCI was not a procedural or mechanical act. The decision required the exercise of judgment and application of the law as evidenced by the supervisor’s several requests recorded in the activity record in KSCI’s underlying case that Mr. Matos research the personal holding company rules. Assuming arguendo that the treatment of KSCI as a personal holding company was a ministerial act, the assessment of interest in this case was not attributable to that act. The interest at issue was assessed on a deficiency resulting from petitioner’s failure to report capital gains and dividend 4(...continued) accumulated earnings and profits to lose their S corporation status and be treated as C corporations. The examining agent here applied the personal holding company provisions to KSCI as if the provisions operated in like manner to sec. 1362(d)(3) to terminate a corporation’s valid election to be treated as an S corporation. We note that former sec. 1372(e)(5) as originally enacted in 1958 provided for the termination of S corporation status if the corporation had passive investment income as defined in sec. 1372(e)(5).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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