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reasons, a taxpayer generally is not entitled to a credit for
seized property until it is sold. See sec. 6342.8
B. Dominion and Control of Seized Property
Some courts have held that a taxpayer is entitled to credit
for seized property where the Commissioner has exercised dominion
and control over the property to the taxpayer’s exclusion. See
United States v. Barlow’s, Inc., 767 F.2d 1098 (4th Cir. 1985),
affg. 53 Bankr. 986 (E.D. Va. 1984); United States v. Pittman,
449 F.2d 623 (7th Cir. 1971). Petitioners rely upon these cases
in arguing that they are entitled to a credit for the value of
their stock accounts.
In each of the cited cases, the Commissioner went well
beyond mere service of a notice of levy on the property,
exercising powers over the property essentially consistent with
ownership. For example, in United States v. Barlow’s, Inc.,
supra, the Commissioner served a notice of levy on a third-party
debtor with respect to an account receivable that the taxpayer
owned. The Commissioner did not sell the account receivable but
8 Sec. 6342(a) provides that any money realized by
proceedings under the seizure of property provisions (whether
realized by seizure, by surrender, or by sale of seized
property), or by sale of property redeemed by the United States
shall be applied: (1) First, against the expenses of the
proceedings; (2) then against any specific tax liability on the
seized property; and (3) then against the liability in respect of
which the levy was made or the sale was conducted. The
Commissioner must credit or refund to the taxpayer any surplus
proceeds. Sec. 6342(b).
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