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The “Scar” Issue
Petitioner argues that the notice of deficiency should be
held invalid under the standard set forth in Scar v.
Commissioner, 814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855
(1983), because respondent’s determination in the notice of
deficiency was not adequately explained, and because respondent
disallowed all of petitioner’s deductions without making a
sufficient attempt to identify the deductions to which petitioner
was entitled. Petitioner’s and his counsel’s misunderstanding of
the Scar opinion is so obvious as to constitute willful
“obtuseness”. See Coleman v. Commissioner, 791 F.2d 68, 72 (7th
Cir. 1986).
In Scar, the Commissioner issued the taxpayers a notice of
deficiency adjusting income in the amount of $138,000 for
“Partnership - Nevada Mining Project.” The taxpayers had nothing
to do with a Nevada mining project partnership. The Commissioner
admitted that the notice of deficiency was issued in error but
sought to proceed to collect other amounts not referenced in the
notice of deficiency that the Commissioner claimed the taxpayers
owed. Citing the general rule that courts do not look behind the
notice of deficiency, the Tax Court held that the notice of
7(...continued)
the Commissioner, petitioner’s motion for imposition of a penalty
on respondent under sec. 6673(a)(1) will be denied.
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