Commissioner v. McCoy
484 U.S. 3 (1987)

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U.S. Supreme Court

Commissioner v. McCoy, 484 U.S. 3 (1987)

Commissioner v. McCoy

No. 87-75

Decided October 19, 1987

484 U.S. 3

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Syllabus

After the United States Tax Court sustained the Commissioner of Internal Revenue's determination that there was a deficiency in respondent's federal estate tax, respondent appealed to the Court of Appeals, but did not file the appeal bond required by the Internal Revenue Code to stay the assessment and collection of the deficiency. The Commissioner therefore assessed the deficiency and issued a notice and demand for payment. When the deficiency was not paid within 10 days, an addition to tax accrued under § 6651(a)(3) of the Code. The Court of Appeals ultimately affirmed the Tax Court's decision that there was a deficiency. Shortly thereafter, respondent paid the tax, but filed a petition with the Court of Appeals asking that the court "forgive" interest on the assessment and also the late payment penalty. The court granted the requested relief "in order to achieve a fair and just result."

Held: The Court of Appeals exceeded its jurisdictional authority when it granted the petition to forgive interest and the late payment penalty. Section 7482(a) of the Code gives the courts of appeals jurisdiction to review Tax Court decisions "in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury," while § 7482(c)(1) provides that "such courts shall have the power to affirm or . . . modify or . . . reverse" the Tax Court's decision. Thus, the Court of Appeals' only jurisdiction here was to review the Tax Court's decision that there was a deficiency and to affirm that decision upon determining that it was correct. It was not empowered to decide other questions relating to interest and a penalty -- questions that were not presented to the Tax Court and that could not have been so presented under §§ 6601(a) and 6651(a)(3) of the Code, which respectively make interest on a deficiency and accrued penalties separate and outside the scope of the petition to the Tax Court, and § 6213(a), which indicates that the deficiency asserted here could be assessed only after the Tax Court had rendered its decision -- or to grant relief that the Tax Court itself, as a court of limited jurisdiction lacking general equitable powers, could not provide.

Certiorari granted; reversed.

Page 484 U. S. 4

PER CURIAM.

In this case, we are asked to determine whether the United States Court of Appeals exceeded its jurisdictional authority when, after affirming a decision of the United States Tax Court, it granted the taxpayer estate's request to forgive interest on the determined deficiency in estate tax and also to forgive a statutorily imposed late payment penalty. We are constrained to hold that the Court of Appeals did exceed its authority.

I

Arthur H. McCoy died testate on April 23, 1980. His son, Robert McCoy, the respondent here, was appointed executor of his will. At his death, the decedent was the owner of an undivided interest in a family farm in Clinton County, Ohio. The then fair market value of that interest was $235,140. Under § 2032A of the Internal Revenue Code of 1954, as amended, 26 U.S.C. § 2032A (1982 ed. and Supp. III), however, an estate may elect a special method for valuing certain real property for federal estate tax purposes. This alternative usually is elected if it produces a lower valuation and a lower tax. At the time relevant for the McCoy estate, the election was available only if the land in question was "qualified real property," see § 2032A(b)(1), and only if the election was made "not later than the time prescribed by section 6075(a) for filing the [estate tax] return . . . (including extensions thereof). . . ." 26 U.S.C. § 2032A(d)(1) (1976 ed.). Since § 6075(a) provided that the return was to be filed within nine months of the decedent's death, and since no extension of time was obtained, respondent was required to make any election under § 2032A not later than January 23, 1981.

Respondent, however, did not file the return for the decedent's estate until February 11. In the return, the election as to the interest in the farm -- which, it is conceded, would have been "qualified real property" -- was asserted. The Commissioner of Internal Revenue, however, took the position that the election was untimely under §§ 2032A and

Page 484 U. S. 5

6075(a), and that the farm interest therefore was to be valued at the date-of-death figure of $235,140, rather than at the special-use figure of $103,304.70 claimed in the return as filed. The lower value would have produced no tax. The Commissioner, using the higher value, determined a deficiency in estate tax of $22,159.72.

Respondent sought redetermination of the asserted deficiency in the United States Tax Court. He contended that the time for making the election under § 2032A had been extended retroactively by amendments to the statute effected by the Economic Recovery Tax Act of 1981, Pub.L. 97-34, § 421(k)(5), 95 Stat. 314, note following 26 U.S.C. § 2032A.

The Tax Court rejected respondent's contention and sustained the deficiency. Estate of McCoy, 50 TCM 1194 (1985),

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