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to his or her detriment. Hofstetter v. Commissioner, 98 T.C.
695, 700 (1992). The Court has recognized that estoppel is
applied against the Commissioner “with utmost caution and
restraint.” Id.; Kronish v. Commissioner, 90 T.C. 684, 695
(1988); Boulez v. Commissioner, 76 T.C. 209, 214-215 (1981),
affd. 810 F.2d 209 (D.C. Cir. 1987); Estate of Emerson v.
Commissioner, 67 T.C. 612, 617 (1977).
The taxpayer must establish the following elements before
equitable estoppel will be applied against the Commissioner:
(1) The Commissioner knew the facts; (2) the Commissioner
intended that his conduct be acted upon, or must have acted so
that the taxpayer asserting estoppel had a right to believe it
was so intended; (3) the taxpayer must have been ignorant of the
facts; and (4) the taxpayer must have reasonably relied on the
Commissioner’s conduct to the taxpayer’s substantial injury.
Edgewater Hosp., Inc. v. Bowen, 857 F.2d 1123, 1137 (7th Cir.
1988). The party claiming estoppel has the burden of
demonstrating the elements. See Lyng v. Payne, 476 U.S. 926, 935
(1986); United States v. Asmar, 827 F.2d 907, 912 (3d Cir. 1987).
The Court of Appeals for the Seventh Circuit, to which this
case is appealable, requires a fifth element for equitable
estoppel to apply against the Commissioner. The fifth element
requires the taxpayer asserting estoppel to demonstrate that the
Commissioner has engaged in “affirmative misconduct.” See Gibson
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