Estate of Edward P. Roski, Sr., Deceased, Edward P. Roski, Jr., Executor - Page 23

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          IV. Respondent’s Denial of the Section 6166 Election on the                 
               Basis of Bright-Line Bond Requirement Is an Abuse of                   
               A.   Standard of Review                                                
               When reviewing an agency action, a reviewing court shall               
          hold unlawful and set aside any agency action that is arbitrary,            
          capricious, or an abuse of discretion.  See Keene v.                        
          Commissioner, 121 T.C. 8, 17-18 (2003) (“when a taxpayer’s                  
          underlying tax liability is not properly at issue in the                    
          administrative hearing, we review the Appeals Office’s                      
          determination for abuse of discretion”) (citing Lunsford v.                 
          Commissioner, 117 T.C. 183, 185 (2001)).  Respondent argues that            
          we do not have abuse of discretion review under section 6166                
          because section 7479 also gives us jurisdiction over eligibility            
          for the section 6166 election in the case of a “failure by the              
          Secretary to make a determination”.  Sec. 7479(a).  Thus,                   
          respondent argues that Congress did not intend an abuse of                  
          discretion standard.  Contrary to respondent’s assertion, abuse             
          of discretion has been found in situations where the                        
          Commissioner’s refusal to exercise discretion is arbitrary,                 
          capricious, or unreasonable.  See Greene v. Commissioner, T.C.              
          Memo. 1997-296 (citing Mailman v. Commissioner, 91 T.C. 1079                
          (1988), Estate of Gardner v. Commissioner, supra, and Haught v.             
          Commissioner, T.C. Memo. 1993-58).                                          

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