126 T.C. No. 12
UNITED STATES TAX COURT
GARWOOD IRRIGATION COMPANY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1459-03. Filed May 1, 2006.
P, an S corporation, is due an overpayment that
exceeds $10,000. R computes that overpayment using the
Federal short-term rate plus 0.5 percentage point
according to R’s reading of sec. 6621(a)(1), I.R.C. P
maintains that it should not be treated as a
corporation for purposes of determining the applicable
rate because of its S corporation election. P’s
position is based upon sec. 6621(c)(3), I.R.C., which
is cross-referenced in sec. 6621(a)(1), I.R.C.
Held: The lower corporate rate set forth in the
flush language of sec. 6621(a)(1), I.R.C., applies to C
corporations, and P is entitled to the higher rate of
overpayment interest set forth in sec. 6621(a)(1)(B),
I.R.C., for corporations (the Federal short-term rate,
plus 2 percentage points).
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