New York Football Giants, Inc. - Page 8

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          the corporate level, specifically including the section 1374                
          built-in gains tax.                                                         
               Petitioner contends that the regulation is invalid because             
          it subjects the corporate entity to unified audit and litigation            
          procedures.  Petitioner contends in the alternative that the                
          section 1374 tax is not a subchapter S item of the corporation              
          but rather an S item of the shareholders.  To support this,                 
          petitioner contends that the built-in gains tax is a subchapter S           
          item only to the extent it affects (i.e., reduces) the share of             
          net income passed through to each of the S corporation’s                    
          E.   Whether Sec. 301.6245-1T, Temporary Proced. & Admin. Regs.,            
               Is Invalid                                                             
               Section 301.6245-1T, Temporary Proced. & Admin. Regs.,                 
          supra, was promulgated pursuant to a specific grant of authority            
          in section 6245.  As a legislative regulation, it is entitled to            
          greater deference than an interpretative regulation promulgated             
          under the Secretary’s general rulemaking power under section                
          7805(a), Peterson Marital Trust v. Commissioner, 102 T.C. 790,              
          797-798 (1984), affd. 78 F.3d 795 (2d Cir. 1996), and is invalid            
          only if it is arbitrary, capricious, or manifestly contrary to              
          the statute, Chevron U.S.A., Inc. v. Natural Res. Def. Council,             
          Inc., 467 U.S. 837, 844 (1984).                                             
               Citing Goodson-Todman Enters., Ltd. v. Commissioner, 784               
          F.2d 66, 73-74 (2d Cir. 1986), affg. 84 T.C. 255 (1985),                    

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