Princess Stephan Obriot - Page 8




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          Rose v. Commissioner, 55 T.C. 28, 31 (1970).  Such retroactive              
          application violates the Due Process Clause of the Fifth                    
          Amendment when "'retroactive application is so harsh and                    
          oppressive as to transgress the constitutional limitation.'"                
          United States v. Carlton, 512 U.S. 26, 30 (1994) (quoting Welch             
          v. Henry, 305 U.S. 134, 147 (1938)).  According to the Supreme              
          Court in Carlton the “harsh and oppressive” standard is the same            
          as the “‘prohibition against arbitrary and irrational                       
          legislation’ that applies generally to enactments in the sphere             
          of economic policy.”  Id. (quoting Pension Benefit Guar. Corp. v.           
          R.A. Gray & Co., 467 U.S. 717, 733 (1984)).  Therefore,                     
          retroactive tax provisions will be upheld if they are supported             
          by a “legitimate legislative purpose furthered by rational                  
          means”.  Id. at 30-31.                                                      
               We understand petitioner’s frustration because she complied            
          with the requirements of section 32(c)(3) as they existed when              
          she filed her Federal income tax returns for 1995 and 1996, and             
          we are particularly sympathetic to her position.  However, we are           
          compelled to follow our recent opinion in Sutherland v.                     
          Commissioner, T.C. Memo. 2001-8.  In that case, this Court                  
          concluded that the 1998 retroactive amendment of section 32(c)(3)           
          was a clarification of existing law and upheld it as                        
          constitutional.  Accordingly, for the reasons set forth in                  
          Sutherland, we sustain respondent’s determination.  If                      





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