“Tax laws must be applied as uniformly as possible. However, the [IRS] Commissioner is not required to offer a settlement to one taxpayer consistent with that offered to other similarly situated taxpayers, absent proof that a taxpayer has been singled out for adverse treatment based on impermissible considerations such as race or religion, and absent contractual agreements to the contrary.” (internal citation omitted)
How later courts described this case
- “Tax laws must be applied as uniformly as possible. However, the [IRS] Commissioner is not required to offer a settlement to one taxpayer consistent with that offered to other similarly situated taxpayers, absent proof that a taxpayer has been singled out for adverse treatment based on impermissible considerations such as race or religion, and absent contractual agreements to the contrary.” (internal citation omitted)
Written by the judges who cited it.
The opinion
T.C. Memo. 2005-37
UNITED STATES TAX COURT
FARAMARZ AND MITRA ELGHANIAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
FARAMARZ ELGHANIAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 254-03, 256-03.1 Filed February 28, 2005.
Howard S. Fisher, for petitioners.
Jack H. Klinghoffer and Gerard Mackey, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COLVIN, Judge: Respondent determined deficiencies in
petitioners’ Federal income tax and an addition to tax and a
penalty as follows:
1
These cases were consolidated for trial, briefing, and
opinion.
- 2 -
Faramarz Elghanian
Addition to Tax and Penalty
Year Deficiency Sec. 6661, I.R.C. Sec. 6662(a), I.R.C.
1987 $1,867
1988 186,159 $46,540
1989 219,622 $43,924
Faramarz and Mitra Elghanian
Year Deficiency
1990 3,949
1991 3,949
The issues for decision are:
1. Whether petitioner’s2 loss on the expropriation of his
family’s Iranian property occurred in 1979, as respondent
contends, or in 1986, as petitioners contend. We hold that it
occurred in 1979.
2. Whether petitioner was a resident of the United States
in 1979. We hold that he was not.
3. Whether petitioner is entitled to a settlement of his
claimed deduction for expropriation losses on the same terms as
respondent’s settlement with petitioner’s father and brother. We
hold that he is not.
4. Whether petitioner is liable for the addition to tax
under section 6661(a)3 for 1988 and the accuracy-related penalty
2
References to petitioner are to Faramarz Elghanian.
3
Section references are to the Internal Revenue Code as
amended and in effect in the years in issue. Rule references are
to the Tax Court Rules of Practice and Procedure.
- 3 -
under section 6662(a) for 1989 for substantial understatement of
tax. We hold that he is not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners were married and resided in France when they
filed their petition.4
1. Petitioner’s Family and Early Years
Petitioner was born in Iran in 1950 or 1951. Petitioner’s
father and several of his father’s brothers owned businesses in
Iran which had 5,000-8,000 employees in the 1970s.
Petitioner’s father was born in Iran. His mother was born
in London. Petitioner attended school in Iran from 1957 to May
1965. Petitioner never worked for his family’s businesses in
Iran.
Petitioner applied for an alien registration receipt card
(green card)5 in 1965 when he was about 14 years old. In his
4
Petitioner testified that he and his wife resided in
France beginning before Sept. 11, 2001, and continuing through
the date of trial. Petitioners stated in the petition that their
mailing address was c/o Steven E. Golden, C.P.A., in New York,
New York. There is no evidence that they resided in New York
when they filed the petition.
5
"Green card" is the common name for a Form I-151, Alien
Registration Receipt Card. See Moorhead v. United States, 774
F.2d 936, 938-939 n.4 (9th Cir. 1985); Gooch v. Clark, 433 F.2d
74, 76 (9th Cir. 1970); see also sec. 264 of the Immigration and
Nationality Act (1952), ch. 477, 66 Stat 163, 224, as amended, 8
U.S.C. sec. 1304 (1994); 8 C.F.R. sec. 264.5 (2000); Gordon &
- 4 -
green card application, petitioner said that he intended to study
in the United States and stay as an immigrant. The United States
issued a green card6 to petitioner, his parents, and a brother
and sister in the mid-1960s. Petitioner’s father came to the
United States in the mid-1960s for an amount of time not
specified in the record and then returned to Iran.
Petitioner visited the United States in July 1965. He had
his green card at that time. Also that month, he began attending
high school in Great Britain. Petitioner attended high school in
England until May 1969.
2. Petitioner’s Presence in the United States From 1969 to
1977
Petitioner applied only to colleges in the United States.
Petitioner came to the United States on an Iranian passport and a
student visa7 issued by the United States in 1969.
Petitioner attended Florida Southern College from July 1969
to May 1973, and he received a 4-year college degree in business.
Rosenfield, Immigration Law and Procedure, sec. 6.10d (rev. ed.
1959) and sec. 6.9d (rev. ed. 1985).
6
In a letter to petitioner dated Sept. 22, 1986, the
District Director for the New York District of the U.S.
Department of Justice, Immigration and Naturalization Service,
stated that petitioner was a lawful permanent resident on July
28, 1965.
7
A student visa authorizes an alien to be admitted to the
United States for the time necessary to complete a full course of
study plus 60 days. Immigration and Nationality Act (1952), ch.
477, sec. 101(a)(15)(F), 66 Stat. 163, 168; 8 U.S.C. sec.
1101(a)(15)(F); 8 C.F.R. sec. 214.2(f)(5).
- 5 -
While in Florida, petitioner obtained a license to buy and sell
real estate.
Petitioner went to Iran about once every 2 years during the
years he was an undergraduate student. He stayed 2-3 weeks per
visit. In the late 1960s and early 1970s, petitioner told his
parents that he intended to reside in the United States.
Petitioner married his cousin, Shirley Elghanian, in Iran in July
1972.
Petitioner began attending graduate school at George
Washington University, Washington, D.C., in September 1973. He
received a master’s degree in business administration in 1976.
Petitioner and Shirley Elghanian rented an apartment in
Washington, D.C., while petitioner attended George Washington
University.
After petitioner finished graduate school, he and Shirley
Elghanian shared an apartment in Boston with Moeez Elghanian,
Shirley Elghanian’s brother and petitioner’s cousin. Petitioner
and Moeez Elghanian viewed various properties for possible
syndication, and they traveled frequently.
Petitioner told his brother Phillip Elghanian after 1970 and
after petitioner got married that he intended to reside in the
United States. Nassar Victory (Victory), petitioner’s second
cousin, saw petitioner about 10 times per year from 1970 to 1977.
Petitioner told Victory that he intended to reside in the United
- 6 -
States. After graduate school, petitioner told Steven Kumin
(Kumin), a friend of his who lived in the Boston area, that
petitioner intended to reside in the United States.
3. The Customs Administration Building in Tehran, Iran
On a date not specified in the record, petitioner’s father
paid about $2 million to buy land in Tehran, Iran, on which he
intended to build his personal residence. At a time not
specified in the record, petitioner’s father arranged to have the
Customs Administration Building constructed on that site.
Petitioner’s parents owned the land on which it was to be built.
The Customs Administration Building had 3 underground
parking levels, about 25 retail stores, and 3 office towers which
were 11 or 12 stories high. The building occupied about an acre
of land. It cost about $15 million to build the Customs
Administration Building and another $1.5 to $2 million for tenant
improvements. The Iranian Department of Taxation and Customs
occupied the Customs Administration Building.
Petitioner conveyed an interest in the building (about 6
meters by 14 meters, not otherwise described in the record) to
the regional electrical company for a price not stated in the
record on a date not clear from the record.
- 7 -
4. Events From 1977 to June 1979
Based on the experiences of some of his relatives,
petitioner believed that he would be required to serve for 2
years in the Iranian military in order to return to Iran later to
deal with his family’s property. On a date in 1977 not specified
in the record, petitioner returned to Iran to begin that service.
Petitioner’s parents lived in Iran at that time. Petitioner left
a car, some dishes, photographs, and clothing in Boston, which he
intended to reclaim later.
Shirley Elghanian returned to Iran with petitioner in 1977.
Petitioner’s daughter, Roya, was born in Iran in December 1977.
Because of political unrest in Iran, Shirley Elghanian and Roya
went to London in 1978 to live with Shirley Elghanian’s parents.
Petitioner’s mother and his brother, Phillip Elghanian,
moved to the United States in 1978.
B. Events in 1979
1. The Expropriation
In January 1979, the Shah of Iran was deposed in a
revolution. The Ayatollah Khomeini became the new leader of
Iran.8
8
For a more detailed account of these events in Iran, see
Contl. Ill. Corp. v. Commissioner, 94 T.C. 165 (1990);
Halliburton Co. v. Commissioner, 93 T.C. 758 (1989), affd. 946
F.2d 395 (5th Cir. 1991); and Moshrefzadeh-Sani v. Commissioner,
T.C. Memo. 1992-592.
- 8 -
Petitioner’s father moved to the United States in 1979.
Petitioner’s father’s green card was renewed at that time.
Petitioner’s parents have lived in the United States since 1979.
In April or May 1979, petitioner’s father asked his son-in-law,
Alex Ebrahimzadeh (Ebrahimzadeh), to retrieve the family’s green
cards from petitioner’s father’s office in Tehran and bring them
to him in New York. A U.S. Customs inspector confiscated those
green cards when Ebrahimzadeh brought them into the United
States.
2. Petitioner’s Imprisonment and Escape From Iran
Petitioner completed 2 years of service in the Iranian
military around May 1, 1979. He intended to leave Iran at that
time, but the Iranian government prevented petitioner from
leaving. Habib Elghanian, petitioner’s uncle, was executed on
May 29, 1979. The Iranian government expropriated petitioner’s
family businesses and property.
On June 1, 1979, petitioner was arrested, blindfolded,
interrogated, and imprisoned. He was released on July 1, 1979,
He reasonably feared for his life in Iran, and on July 13, 1979,
he fled from Iran under an assumed name. He has not returned to
Iran since then.
3. Petitioner’s Travels in 1979
After leaving Iran, petitioner went to London to see Shirley
Elghanian and Roya. He stayed there for a few weeks. On August
- 9 -
1, 1979, he traveled to Spain to visit his brother, Farhad
Elghanian, and to obtain a visa to come to the United States. He
received a B-1 or B-2 entry visa.9
Petitioner then went to New York where he spent about 3
weeks with his parents, family, and friends. He then went to
France for about 1 month. Petitioner went to London for 2-3
weeks in November 1979, and then to Israel for 1-2 weeks, and
back to London for about 2 weeks.
Petitioner then went to New York, stayed briefly with his
parents, and, in December 1979, began occupying an apartment at
279 E. 44th Street owned by petitioner, his wife, and her two
sisters. Petitioner had a birthday party for his brother Phillip
at that apartment in December 1979.
9
B visas permit aliens to enter the United States
temporarily if they have a foreign residence that they have no
intention of abandoning, and do not engage in labor, study, or
work as a representative of foreign media while in the United
States. See sec. 101(a)(15)(B) of the Immigration and
Nationality Act, 66 Stat. 168, 8 U.S.C. sec. 1101(a)(15)(B). A
B-1 visa may be issued to an alien visiting the United States on
business for up to 6 months and may be extended for periods of up
to 6 months. 8 C.F.R. sec. 214.2(b) (1976); see Elsaesser v.
Commissioner, T.C. Memo. 1978-2 (applies 8 C.F.R. sec. 214.2(b)
(1976)). B-2 visas are issued to aliens who are temporary
visitors to the United States for business or for pleasure. See
sec. 101(a)(15)(B) of the Immigration and Nationality Act, 66
Stat. 168, 8 U.S.C. sec. 1101(a)(15)(B); 22 C.F.R. 41.12 (1970
ed.). A B-2 visa may be issued to an alien visiting the United
States temporarily if the alien has permission to enter a foreign
country when he or she leaves the United States. 22 C.F.R. sec.
41.25 (1970 ed.); see Dillin v. Commissioner, 56 T.C. 228, 243
(1971) (discussing B visas and applying 22 C.F.R. sec. 41.25
(1970 ed.)).
- 10 -
Petitioner was not engaged in the sale of stock as a trade
or business in 1979. Petitioner owned a rental apartment near
London that he had received as a gift. He never lived in that
apartment.
C. Events in the 1980s
1. Filing of Petitioner’s Family’s Expropriation Claim
Petitioner and his family learned of the expropriation in
1980. On May 15, 1980, petitioner’s father, on behalf of his
immediate family, filed with the Office of Foreign Assets Control
of the United States Department of the Treasury a claim for the
expropriated property (Census of Claims by United States Persons
Against Iran). In it, petitioner’s father claimed expropriation
losses of $113,530,000, including stock which he valued at
$11,580,000; the Customs Administration Building which he valued
at $20 million; other real property which he valued at $10.45
million; loans which he valued at $1.5 million; and tangible
personal property which he valued at $70 million. Petitioner
signed the claim. In the claim, petitioner’s father stated that
the date of loss was June or July 1979. Petitioner’s family
prepared the form from memory. None of the property listed in
the claim was ever connected with a trade or business in the
United States.
- 11 -
2. Petitioner’s Activities
In 1980, petitioner traveled to and from New York and
Europe, spending a month or two at each location. At that time,
petitioner’s wife’s family owned four or five hotels in central
London, the largest of which had 400 rooms.
Shirley Elghanian and Roya were in London until the end of
1981. At that time they went to New York and stayed with
petitioner in the apartment at 279 E. 44th Street. In May 1982,
petitioner, Shirley Elghanian, and Roya moved to an apartment on
57th Street in New York, where they lived until September 1982.
Petitioner and Shirley Elghanian separated in September
1982. Shirley Elghanian and Roya went to London on October 6,
1982. Petitioner went to London in late October 1982, to visit
Roya, to try to reconcile with Shirley Elghanian, and to retain
divorce counsel. Thereafter, petitioner traveled frequently
between London and New York to try to gain custody of Roya and to
conduct business not described in the record in London.
On September 7, 1983, U.S. Immigration and Naturalization
Service (INS) authorities stopped petitioner at JFK International
Airport. They alleged that he had presented an altered Iranian
passport. Petitioner told them that personnel at an Iranian
consulate had made handwritten entries on the renewal pages of
petitioner’s Iranian passport, including extending the expiration
date. At that time, in response to a request from an INS
- 12 -
officer, petitioner provided an affidavit regarding his
application to enter the United States. In it, he said, inter
alia, (1) that he did not have an apartment in the United States,
(2) that he would eventually like to reside permanently in the
United States, and (3) that he intended to stay in the United
States for several weeks and then travel to Israel.
Petitioner applied for political asylum in the United States
in October 1983. He was staying at his parent’s apartment in New
York at that time. Petitioner was granted political asylum in
the United States on April 20, 1984. He was divorced from
Shirley Elghanian in 1984.
Around 1985, petitioner’s family heard that the Iranian
government would welcome expatriates to return to run their
former businesses. Khalil and Soleyman Elghanian, petitioner’s
cousins, went to Iran on behalf of the family in 1985 in an
attempt to reclaim Elghanian family assets. They discovered that
the offer was a hoax. They believed that they were in danger in
Iran. They paid smugglers to help them escape from Iran.
D. Petitioner’s Tax Filing and Earnings History and 1986 Income
Tax Return
Petitioner filed no U.S. Federal income tax returns for any
tax year before 1986. He had no earnings in the United States
before 1987.
- 13 -
A certified public accountant (C.P.A.) prepared petitioner’s
1986 income tax return on April 21, 1987. In it, petitioner
reported no gross income and no tax due.
On November 5, 1987, petitioner’s C.P.A. prepared
petitioner’s amended return for 1986. In that return, petitioner
claimed a $9,339,066 loss on Form 4797, Gains and Losses From
Sales or Exchanges of Assets Used in a Trade or Business and
Involuntary Conversions. The $9,339,066 loss was based on
petitioner’s share of the family assets expropriated by the
Iranian government. Petitioner attached the following statement
to his amended 1986 return:
The losses taken on Form 4797 represent taxpayers’
losses of business assets in Iran. They are based
solely on the Census of Claims by United States Persons
Against Iran filed with the Office of Foreign Assets
Control, Department of the Treasury, Washington, D.C.
20220, by the taxpayers’ family. The taxpayers’ family
has allocated to each family member their proportionate
interest in such assets. The only losses taken were
those the taxpayer deemed to be business assets and it
is their contention that amount claimed are their
costs. The taxpayers determined that these assets were
only seized in 1986. The tax preparers have not
verified the assets, their costs or the year the loss
was incurred.
E. Petitioner’s 1987-91 Income Tax Returns
Petitioner filed returns for 1987-89, and petitioners filed
joint returns for 1990-91 in which they reported the following:
- 14 -
State Net
Taxable Tax Capital Sched. E Operating
Year Wages Interest Dividends Refund (Losses) (Losses) (Losses)
1987 $5,272 $2,957 ($3,000) ($9,339,066)
1988 $400,000 262,895 395,255 (3,000) ($17,708) (694,227)
1989 1,000,000 701,424 218,188 (3,000) (231,737) (8,622,478)
1990 719,826 31,905 (3,000) (79,383) (25,850)
1991 6,921 133,587 16,136 $958 (3,000) (447)
F. Events After the 1980s
Petitioner married Mitra Rasson in New York, New York, in
1990. Petitioner began living with his family in France at a
time not specified in the record before September 11, 2001, and
continuing through the date of trial. His children attend school
there. Petitioner has never become a citizen of the United
States.
G. Respondent’s Settlement With Petitioner’s Father and Brother
Petitioner’s father and Phillip Elghanian each deducted
losses of $9,339,066 for 1980 from the expropriation of their
Iranian property. Those losses were carried forward to 1988 and
1989 by petitioner’s father and to 1989 by Phillip Elghanian. In
2003, the Commissioner allowed each of them an NOL of $3,868,946.
OPINION
A. Whether the Expropriation Loss Occurred in 1979 or 1986
To be a deductible loss under section 165, the transaction
must be closed, completed, and fixed by identifiable events in
the taxable year. Boehm v. Commissioner, 326 U.S. 287, 291-292
(1945); sec. 1.165-1(b), Income Tax Regs. Whether a loss
occurred during a particular taxable year is a question of fact.
Boehm v. Commissioner, supra at 294; Korn v. Commissioner, 524
- 15 -
F.2d 888, 890 (9th Cir. 1975), affg. T.C. Memo. 1973-258. An
important indication of the year of loss is the year that the
taxpayer loses control and possession of the property. United
States v. S.S. White Dental Manufacturing Co., 274 U.S. 398, 402
(1927).
Petitioners contend that the expropriation loss occurred in
1986 because (1) the Iranian government promised until 1986 to
restore the assets to the Elghanian family if they would return
to operate the business; (2) petitioner believed until the time
of the Iran-Contra affair in 1986 that the United States would
overthrow the Iranian government, enabling his family to recover
its property; and (3) petitioner had a reasonable prospect of
recovery until 1986.
We disagree. The Iranian government’s attempt to lure
members of petitioners’ family back to Iran was a hoax.
Petitioner’s belief that the United States would restore his
family’s property was remote, nebulous, and speculative. A loss
deduction is not postponed based on remote or nebulous
possibilities of recovery. Id. at 402-403. We conclude that the
loss did not occur in 1986, and, based on this record, that it
occurred in 1979, the year of the expropriation.10
10
Petitioners bear the burden of proof on the residence
and expropriation loss issues. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). The burden of proof for a factual
issue may shift to the Commissioner under certain circumstances.
(continued...)
- 16 -
B. Whether Petitioner Was a Resident of the United States in
1979
1. Background
The parties dispute whether petitioner was a resident of the
United States in 1979.11 If petitioner was not a U.S. resident
in 1979, then petitioners may not deduct the expropriation losses
in 1979, or carry those losses forward to later years during
which he was a U.S. resident.
An alien is a resident of the United States if he or she is
present in the United States and is not a mere transient or
sojourner, the determination of which depends on the intended
length and nature of the stay. Sec. 1.871-2(b), Income Tax Regs.
The fundamental issue in determining residence is whether the
alien intends to make the United States his or her home. Dawson
v. Commissioner, 59 T.C. 264, 268 (1972). An alien who lives in
the United States and has no definite intention as to his or her
stay is a resident for purposes of the income tax. Id. at 268
n.3.
10
(...continued)
Sec. 7491(a). Petitioners do not contend that sec. 7491(a)
applies.
11
In deciding petitioner’s residence for 1979, we consider
the law then in effect. Sec. 7701(b) was enacted in 1984
effective for taxable years beginning after Dec. 31, 1984.
Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 138, 98 Stat.
672.
- 17 -
The term “residence” and “domicile” are not synonymous;
however, to be a resident, the taxpayer must have some degree of
permanent attachment to the country of residence. Park v.
Commissioner, 79 T.C. 252, 287 (1982), affd. without published
opinion 755 F.2d 181 (D.C. Cir. 1985). An individual may be a
resident of the United States without terminating his or her
residence in another country. Id. at 287-288.
2. Whether Petitioner Was a Resident of the United States
in 1979
Petitioner argues that the following establish that he was a
U.S. resident from 1969 through the years at issue: (a) He was
issued a green card in 1965; (b) he was in the United States from
1969 through 1977 and part of 1979; (c) his parents, brother, and
some other family members lived here; and (d) he told some
members of his family and friends that he wanted to live in the
United States.
a. Petitioner’s Green Card
Petitioner argues that the fact that he received a green
card and permanent lawful resident status in 1965 shows that he
was a resident of the United States from 1969 through the years
in issue. We disagree. Issuance of a green card in 1965, when
petitioner was about 14 years old, has little or no bearing on
whether petitioner was a resident in 1979. For that we look to
events which occurred closer to 1979.
- 18 -
One reason that we give little weight to the fact that
petitioner had a green card in 1965 is that petitioner, in his
dealing with U.S. immigration matters, frequently acted as if he
were not a U.S. resident. First, the record does not indicate
that petitioner ever used the green card after his short visit
here in July 1965.
Second, petitioner used a student visa issued by the United
States to enter the United States in 1969 to attend college.
Whatever intent to reside in the United States that petitioner
may have had when he obtained a green card in 1965 is clouded by
his obtaining a student visa, which authorizes an alien to remain
in the United States only as long as necessary to complete a
course of study plus 60 days. Sec. 101(a)(15)(F) of the
Immigration and Nationality Act,12 66 Stat. 168, 8 U.S.C. sec.
1101(a)(15)(F)(I); see 8 C.F.R. sec. 214.2(f)(5)(iv) (1981).
Petitioner testified that he obtained and used a student
visa in 1969 to facilitate leaving Iran to attend college in the
United States and to facilitate travel to and from Iran when he
12
Immigration and Nationality Act (1952), ch. 477, sec.
101(a)(15)(F), 66 Stat. 168; 8 U.S.C. sec. 1101(a)(15)(F)(i)
(1970), describes persons qualified for a student visa as:
an alien having a residence in a foreign country which
he has no intention of abandoning, who is a bona fide
student qualified to pursue a full course of study and
who seeks to enter the United States temporarily and
solely for the purpose of pursuing such a course of
study consistent with * * * [requirements set forth
elsewhere in the Code]. [Emphasis added.]
- 19 -
did not have his green card. Despite his explanation, we believe
petitioner’s use of a student visa is inconsistent with a claim
that, at that time, he intended to be in the United States other
than as a student.
Third, petitioner entered the United States under a B-1 or
B-2 visa in 1979. Aliens entering the United States under a B
visa may stay in the United States only temporarily. Sec.
101(a)(15)(B) of the Immigration and Nationality Act,13 66 Stat.
167, 8 U.S.C. sec. 1101(a)(15)(B);14 8 C.F.R. 214.2(b)(1976).
Authorities issuing the B visa presumably found15 that petitioner
qualified for it at the time; i.e., that he was entering the
13
Immigration and Nationality Act (1952), ch. 477, sec.
101(a)(15)(B), 66 Stat. 167; 8 U.S.C. sec. 1101(a)(15)(B) (1970),
describes persons qualifying for a B visa as:
(15) The term "immigrant" means every alien except
an alien who is within one of the following classes of
nonimmigrant aliens–
* * * * * * *
(B) an alien (other than one coming for the
purpose of study or of performing skilled or unskilled
labor or as a representative of foreign press, radio,
film, or other foreign information media coming to
engage in such vocation) having a residence in a
foreign country which he has no intention of abandoning
and who is visiting the United States temporarily for
business or temporarily for pleasure; [Emphasis added.]
14
See supra note 9.
15
See Zacharias v. McGrath, 105 F. Supp. 421, 427 (D.D.C.
1952) (presumption of regularity applies to immigration matters).
- 20 -
United States temporarily, that he had a foreign residence that
he had no intention of abandoning, and that he did not enter to,
for example, work or study. See supra p. 9 note 9, p. 19 note
13.
Fourth, petitioner’s statement in his application for
permanent residence in the United States in 1983 that he
“eventually” would like to permanently reside in the United
States seems at odds with the proposition that he already was a
U.S. resident.
b. Petitioner’s Years in the United States
Petitioner argues that the fact that he was in the United
States from 1969 through 1977 and part of 1979 establishes that
he was a U.S. resident in 1979. We disagree. Petitioner did not
work in the United States, participate in the economy or society,
or demonstrate a degree of permanent attachment to the United
States. Park v. Commissioner, 79 T.C. at 287; see Demore v. Kim,
538 U.S. 510, 544 (2003); In re Griffiths, 413 U.S. 717, 722
(1973); Sochurek v. Commissioner, 300 F.2d 34, 38 (7th Cir.
1962), revg. and remanding 36 T.C. 131 (1961).
Petitioners point out that we have held that a taxpayer who
entered the United States under a student visa was a U.S.
resident. Siddiqi v. Commissioner, 70 T.C. 553 (1978).
Petitioners contend that this case is like Siddiqi. We disagree.
The taxpayer in that case interrupted his formal education to
- 21 -
work full time and earn wages for 14 months. Id. at 557. His
contacts with the economy were greater than those of petitioner.
Petitioner obtained a real estate license in Florida, and he
considered real estate syndication and viewed real estate while
in Boston. However, he was not employed in the United States
from 1969 to 1979, and he did not earn any income in the United
States from real estate or any other business activity during
those years. He did not show that he had economic ties to the
United States similar to the taxpayer in Siddiqi.
Petitioner traveled to London, Spain, France, and Israel in
1979. In that year his trips to and activities in the United
States were very limited. He occupied an apartment in New York
in December, but he did not show an intent to form ties to the
community. During his time as a student, in Boston, and in New
York in 1979, petitioner was not deeply or continuously involved
in business, personal, social, or political affairs in the United
States. Cf. Park v. Commissioner, 79 T.C. at 289.
c. Petitioner’s Family Members
It appears from our record that petitioner’s parents and
brother, Phillip Elghanian, have been U.S. residents since 1978
or 1979. Petitioner contends that this shows that he was also a
resident in 1979. We disagree. Petitioner has made other
choices, apparently independent of his family.
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d. Petitioner’s Statements to Family and Friends
Petitioner points out that some of his family members and
friends testified that he told them in the 1970s that he intended
to reside in the United States. We have no reason to doubt that
testimony, but we believe petitioner’s actions over the years
speak more clearly to his intent than his statements to those
witnesses.
e. The Petition in This Case
Petitioner signed both petitions which state that he became
a U.S. resident in 1982. We treat those statements as
petitioner’s admission that he was not a resident of the United
States in 1979. Statements in petitions filed in this Court are
binding admissions by a taxpayer absent cogent proof that they
are incorrect. See Beard v. Commissioner, 82 T.C. 766, 768 n.6
(1984), affd. 793 F.2d 139 (6th Cir. 1986); Mooneyham v.
Commissioner, T.C. Memo. 1991-178. Petitioners have not
presented cogent proof that petitioner was a resident of the
United States in 1979.
3. Conclusion
We conclude that petitioner was not a U.S. resident in 1979.
C. Whether Petitioner Is Entitled To Deduct an Expropriation
Loss in the Same Amount as That Allowed by Respondent in a
Settlement With His Father and Brother
Respondent permitted petitioner’s brother and father each to
carry forward expropriation losses of $3,868,946 from 1980.
Petitioners contend that his losses were the same as his father
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and his brother, and that respondent must treat petitioner and
his father and brother consistently. We disagree.
Tax laws must be applied as uniformly as possible. See
Sunday Lake Iron Co. v. Wakefield Tp., 247 U.S. 350 (1918).
However, the Commissioner is not required to offer a settlement
to one taxpayer consistent with that offered to other similarly
situated taxpayers, absent proof that a taxpayer has been singled
out for adverse treatment based on impermissible considerations
such as race or religion, and absent contractual agreements to
the contrary. Estate of Campion v. Commissioner, 110 T.C. 165,
170 (1998), affd. without published opinion sub nom. Drake Oil
Tech. Partners v. Commissioner, 211 F.3d 1277 (10th Cir. 2000),
and Tucek v. Commissioner, 198 F.3d 259 (10th Cir. 1999); Norfolk
S. Corp. v. Commissioner, 104 T.C. 13, 58-59, supplemented by 104
T.C. 417 (1995), affd. 140 F.3d 240 (4th Cir. 1998); Davis v.
Commissioner, 65 T.C. 1014, 1022 (1976).
Petitioners contend that respondent is estopped from denying
that petitioner is entitled to deduct expropriation losses in the
same amount as respondent allowed for his father and brother. We
disagree. For estoppel to apply to a party, the other party must
have reasonably relied to its detriment on the conduct of the
estopped party. Lyng v. Payne, 476 U.S. 926, 935-36 (1986);
Heckler v. Cmty. Health Servs., Inc., 467 U.S. 51, 59 (1984).
Petitioner filed his 1986 amended return in 1987, which was
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before respondent settled with his father and brother in 2003.
Petitioner could not have relied on those settlements when he
filed his 1986 amended return. There is no evidence that
petitioner relied on any communication by respondent in preparing
his 1986 amended return. Finally, it appears from our record
that petitioner’s parents and probably his brother were U.S.
residents by 1979. In his petition, petitioner stated that he
became a U.S. resident in 1982. Our record suggests that
petitioner did not establish U.S. residence when his father and
brother did.
We conclude that estoppel does not apply and that petitioner
is not entitled to deduct an expropriation loss in the same
amount as that allowed by respondent in a settlement with his
father and brother.
D. Whether Petitioner Is Liable for the Addition to Tax and
Penalty for Substantial Understatement of Income Tax for
1988 and 1989
For 1988, a taxpayer is liable for an addition to tax equal
to 25 percent of the amount of any underpayment attributable to a
substantial understatement of income tax. Sec. 6661(a). The
amount of the understatement is reduced by amounts attributable
to items (1) for which there existed substantial authority for
the taxpayer's position, or (2) adequately disclosed on the
taxpayer’s return or in a statement attached to the return. Sec.
6661(b)(2)(B).
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For 1989, a taxpayer is liable for an accuracy-related
penalty in the amount of 20 percent of any part of an
underpayment attributable to, among other things, a substantial
understatement of income tax. Sec. 6662(a) and (b)(2). The
amount of the understatement is reduced by amounts attributable
to items (1) for which there was substantial authority for the
taxpayer's position, or (2) adequately disclosed on the
taxpayer’s return or in a statement attached to the return. Sec.
6662(d)(2)(B). The accuracy-related penalty does not apply to
any part of an underpayment for which was a reasonable cause and
with respect to which the taxpayer acted in good faith. Sec.
6664(c)(1); sec. 1.6664-4(a), Income Tax Regs.
Respondent contends that petitioner is liable for the
addition to tax under section 6661(a) for 1988 and the accuracy-
related penalty under section 6662(a) for 1989 for substantial
understatement of tax. We disagree. Petitioner attached a
statement (which he titled a “rider”) to his 1986 amended return.
Disclosure is adequate under section 6661(b)(2)(B)(ii) if, inter
alia, it is made on a statement that includes a caption
identifying the statement as disclosure under section 6661. Sec.
1.6661-4(b) and (c), Income Tax Regs. The statement and the
return were sufficient to apprise respondent that the deduction
was for an expropriation loss, its amount, and the potential
controversy. Petitioner did not refer to section 6661 on his
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1986 amended return or its attachments. However, a disclosure
need not do so if, as here, it clearly puts the Commissioner on
notice of the possible controversy. See Schirmer v.
Commissioner, 89 T.C. 277, 285-286 (1987); Mitchell v.
Commissioner, T.C. Memo. 1994-237, affd. 73 F.3d 628 (6th Cir.
1996).
We conclude that petitioner is not liable for the addition
to tax under section 6661(a) for 1988 and for the accuracy-
related penalty under section 6662(a) and (b)(2) for 1989 for
substantial understatement of tax.
Decisions will be
entered under Rule 155.