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gift.6 Petitioner reported the $160,000 payment as income under
the category “Services & Other Activities” on her State tax
return and paid the State tax on the additional income. Mr.
Skone, the same accountant who purportedly advised Mr. Pettegrove
that the payment was a gift, prepared that return.
Petitioner has failed to establish that the $160,000 payment
was a gift.7 Accordingly, we hold that respondent’s
6While petitioner and respondent had approximately 2 years
from the time that the petition was filed to the start of trial,
both failed to produce relevant information about PCI’s tax
returns that would have been helpful to the Court. Although the
parties stipulated that PCI did not deduct the payment in 2001,
the parties did not present evidence regarding which accounting
method PCI used. A donor’s characterization of his action,
however, is not determinative of its tax treatment in the hands
of the recipient. Duberstein v. Commissioner, 363 U.S. 278, 286-
288 (1960).
7Petitioner also inaptly argued that the duty of consistency
doctrine precludes respondent from asserting that the $160,000
payment is income to petitioner. Petitioner’s argument is
premised upon respondent’s stipulation that the income to
petitioner is either wage income or a gift and that it was not
self-employment income. Petitioner’s counsel suggests that this
is inconsistent with PCI’s treatment of the payment because PCI
did not pay employment taxes on that payment. The duty of
consistency doctrine estops a taxpayer from adopting a position
in an open year that is inconsistent with a position that the
taxpayer took during a different year after the period of
limitations has expired for the earlier year. Estate of Ashman
v. Commissioner, 231 F.3d 541, 543 (9th Cir. 2000), affg. T.C.
Memo. 1998-145. Estoppel and the duty of consistency are to be
applied against the Commissioner with the utmost caution and
restraint, if at all, and only in compelling situations where the
result otherwise would be unwarrantable or unconscionable.
Estate of Emerson v. Commissioner, 67 T.C. 612, 617 (1977).
Petitioner’s argument must fail as there is no inconsistent
treatment or position asserted or taken by respondent.
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