§1551 — Repealed. Pub. L. 115–97, title I, § 13001(b)(5)(A), Dec. 22, 2017, 131 Stat. 2098]

61 cases·3 followed·3 distinguished·1 questioned·1 overruled·53 cited—5% support

Statute Text — 26 U.S.C. §1551

[§ 1551. Repealed. Pub. L. 115–97, title I, § 13001(b)(5)(A), Dec. 22, 2017, 131 Stat. 2098] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 371; Pub. L. 85–866, title II, § 205(a), Sept. 2, 1958, 72 Stat. 1680; Pub. L. 88–272, title II, § 235(b), Feb. 26, 1964, 78 Stat. 125; Pub. L. 94–12, title III, § 304(b), Mar. 29, 1975, 89 Stat. 45; Pub. L. 94–455, title XIX, §§ 1901(a)(158), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1790, 1834; Pub. L. 95–600, title III, § 301(b)(18)(A), (B), Nov. 6, 1978, 92 Stat. 2823; Pub. L. 97–34, title II, § 232(b)(2), Aug. 13, 1981, 95 Stat. 250; Pub. L. 99–514, title XVIII, § 1899A(36), Oct. 22, 1986, 100 Stat. 2960; Pub. L. 113–295, div. A, title II, § 221(a)(94), Dec. 19, 2014, 128 Stat. 4051, related to disallowance of the benefits of the graduated corporate rates and accumulated earnings credit. Repeal was executed to this section, which is in part I of subchapter B of chapter 6, to reflect the probable intent of Congress, notwithstanding directory language of Pub. L. 115–97, which repealed section 1551 in part I of subchapter B of chapter 5. Statutory Notes and Related Subsidiaries Effective Date of RepealRepeal applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 11 of this title.

Treasury Regulations

Treas. Reg. §Treas. Reg. §1.1551-1 Disallowance of surtax exemption and accumulated earnings credit
Treas. Reg. §Treas. Reg. §1.1551-1(a) In general.
Treas. Reg. §Treas. Reg. §1.1551-1(b) Purpose of section 1551.
Treas. Reg. §Treas. Reg. §1.1551-1(c) Application of section 269(b) to cases covered by section 1551.
Treas. Reg. §Treas. Reg. §1.1551-1(d) Actively engaged in business.
Treas. Reg. §Treas. Reg. §1.1551-1(e) Meaning and application of the term “control”—(1) In general.
Treas. Reg. §Treas. Reg. §1.1551-1(f) Taxable year of allowance or disallowance—(1) In general.
Treas. Reg. §Treas. Reg. §1.1551-1(g) Nature of transfer—(1) Corporate transfers before June 13, 1963.
Treas. Reg. §Treas. Reg. §1.1551-1(h) Purpose of transfer.
Treas. Reg. §Treas. Reg. §1.1551-1(i) With respect to a transferee corporation described in paragraph (a) (1) or (2) of this section, the ownership by the transferor corporation, its shareholders, or both, of stock possessing either (a) at least 80 percent of the total combined voting power of all classes of stock entitled to vote, or (b) at least 80 percent of the total value of shares of all classes of stock.

61 Citing Cases

DIST. James H. & Josephine A. Swanson, Petitioner 106 T.C. No. 3 · 1996

3342, 3743, we find them to be inapposite.

California Marine Cleaning, Inc., Petitioner T.C. Memo. 1998-311 · 1998

tify an award of attorney's fees higher than $110 per hour. We hold that no special factor was present. 1 Section references are to the Internal Revenue Code in effect for the years in issue. References to sec. 7430 are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after Dec. 31, 1985), and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3743 (effective

Gerald Jacoby & Arlene Jacoby, Petitioners T.C. Memo. 1997-384 · 1997

References to section 7430 are to that section as amended by section 1551 of the Tax Reform Act of 1986, Pub.

James E. & Mary Jo Blasius, Petitioner T.C. Memo. 2005-214 · 2005

1551(d)(1), 100 Stat. 2752, to substitute "was not substantially justified" for "was unreasonable" in describing a Government position that could give rise to an award of reasonable litigation costs under that provision. As we noted in Shifman v. Commissioner, supra at note 5: "this Court has previously held that the test of whether a Governme

Steven G. Balan & Rachel Margules, Petitioners T.C. Memo. 2005-214 · 2005

1551(d)(1), 100 Stat. 2752, to substitute “was not substantially justified” for “was unreasonable” in describing a Government position that could give rise to an award of reasonable litigation costs under that provision. As we noted in Shifman v. Commissioner, supra at note 5: “this Court has previously held that the test of whether a Governme

Amilu S. Rothhammer, f.k.a. Amilu S. Martin, Petitioners T.C. Memo. 2001-46 · 2001

the Elektra/Hemisphere tax shelter in the early 1980's and deducted amounts based on those investments. 2 Section references are to the Internal Revenue Code in effect for the years in issue. References to sec. 7430 are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2752, effective for proceedings which commenced after Dec. 31, 1985. A “proceeding” under sec. 7430 commences when the petition is filed. See Maggie Management Co. v. Commission

Estate of Alto B. Cervin, Deceased; Bennett W. Cervin, Executor; & Nita-Carol Cervin Miskovitch, Executor, Petitioners T.C. Memo. 1998-176 · 1998

References to section 7430 are to the section as amended by section 1551 of the Tax Reform Act of 1986, Pub.

Anita C. Human, Petitioner T.C. Memo. 1998-65 · 1998

MORANDUM OPINION PARR, Judge: This matter is before the Court on petitioner's motion for award of litigation and administrative costs pursuant to section 74301 and Rule 231. 1 References to sec. 7430 in this opinion are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2752 (effective for proceedings (continued...) - 2 - All section references are to the Internal Revenue Code in effect for the taxable year in issue, and all Rule references are

Larry L. & Cynthia J. Beeler, Petitioner T.C. Memo. 1998-44 · 1998

References to section 7430 are to that section as amended by section 1551 of the Tax Reform Act of 1986, Pub.

Earl M. & Donna M. Hasbrouck, Petitioner T.C. Memo. 1998-249 · 1998

$4,006.39 is attributable to their own time). The stipulated decision was vacated and filed as a Stipulation of Settled Issues on December 16, 1996. Respondent's response to the motion was 1 References to sec. 7430 are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2752 (effective for proceedings commenced after Dec. 31, 1985) and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743

Maggie Management Company, Petitioner 108 T.C. No. 21 · 1997

1551, 100 Stat. 2085, 2752-2753, generally apply to "civil actions or proceedings commenced after December 31, 1985." TRA 1986 sec. 1551(h)(1), 100 Stat. 2753. The amendments enacted by the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-647, sec. 6239(a), 102 Stat. 3342, 3743-3746, generally apply to "proceedings commenci

John E. & Concetta Lozon, Petitioner T.C. Memo. 1997-537 · 1997

UM OPINION VASQUEZ, Judge: This case is before the Court on petitioners' motion for litigation costs pursuant to section 7430 and Rule 231.1 Neither party requested a hearing on the motion. 1 References to sec. 7430 are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2752 (effective for proceedings commenced after Dec. 31, 1985), and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743

Eugene J. & Barbara A. Phillips, Petitioner T.C. Memo. 1997-402 · 1997

the United States was not substantially justified and that the amount of attorney's fees claimed is reasonable. Respondent concedes that petitioners have satisfied the other 1 References to sec. 7430 in this opinion are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after Dec. 31, 1985), and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743-3746

Richard Alan Hashimoto, Petitioner T.C. Memo. 1997-157 · 1997

iling parties in the underlying tax case within the meaning of section 7430(c)(4). We 2 Section references are to the Internal Revenue Code in effect for the year in issue. References to section 7430 in this opinion are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after Dec. 31, 1985) and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100- 647, 102 Stat. 3342, 3743-3747

James D. Schlicher, Petitioner T.C. Memo. 1997-163 · 1997

f reasonable litigation costs (motion). Discussion For this Court to award reasonable litigation costs under section 7430,3 several requirements must be met. The record must 3 References to sec. 7430 in this opinion are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after Dec. 31, 1985) and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743-3746 (

Patricia Williams, a.k.a. Patricia Richardson, a.k.a. Tish Martinson, Petitioners T.C. Memo. 1997-541 · 1997

ligence or disregard of rules or regulations. The underlying matter herein was resolved pursuant to a stipulation of settled issues filed with the Court on June 20, 1997. In the settlement, respondent conceded all deficiencies and 1(...continued) by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (applicable to all proceedings commenced after Dec. 31, 1985), and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743-3

Reliable Credit Association, Inc., Petitioner T.C. Memo. 1997-68 · 1997

1551, 100 Stat. 2752. This change was effected to conform sec. 7430 more closely with the Equal Access to Justice Act (EAJA), 28 U.S.C. sec. 2412 (1988). H. Conf. Rept. 99-841, at 799, 801 (1986), 1986-3 C.B. (Vol. 4) 1, 799, 801. In the context of the EAJA, the Supreme Court has interpreted the phrase "not substantially justified" to mean "ju

Collin L. Dugan, Petitioner T.C. Memo. 1997-458 · 1997

tled issues, petitioner filed a motion for litigation costs. Because petitioner's motion includes a claim for amounts expended for legal fees and related expenses between the dates that the 1 References to sec. 7430 are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2752 (effective for proceedings commenced after Dec. 31, 1985) and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743-

Galedrige Construction, Inc., Petitioner T.C. Memo. 1997-485 · 1997

onald G. Dong, for respondent. MEMORANDUM OPINION PARR, Judge: This case is before the Court on petitioner's motion for reasonable litigation costs pursuant to section 74301 1 References to sec. 7430 in this opinion are to that section as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after Dec. 31, 1985), and by sec. 6239(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3743-3747

Estate of Leon Spear, Deceased; Jeanette Spear, Harvey Spear & Robert Spear, Administrators; and Jeanette Spear, Petitioners T.C. Memo. 1997-366 · 1997

All references to section 7430 are to the section as amended by section 1551 of the Tax Reform Act of 1986, Pub.

D. Sherman & Maxine M. Cox, Petitioner T.C. Memo. 1996-103 · 1996

For civil tax cases commenced after December 31, 1985, section 1551(d)(1) of the Tax Reform Act of 1986, Pub.

Paul Frehe Enterprises, Inc., Petitioner 106 T.C. No. 25 · 1996

References to section 7430 are to that section as amended by section 1551 of the Tax Reform Act of 1986, Pub.

National Industrial Investors, Inc., Petitioner T.C. Memo. 1996-423 · 1996

0(c)(4)(A)(ii)); and (3) if the taxpayer is a corporation, meet the net worth and number of employee requirements of 28 U.S.C. sec. 2412(d)(2)(B) - 4 - (1994) (as in effect on the date of the enactment of the Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551(h)(3), 100 Stat. 2085, 2753) (sec. 7430(c)(4)(A)(iii)). Courts will not award litigation costs under section 7430(a) unless a prevailing party has exhausted the administrative remedies available to such party with the IRS. Sec. 7430(b)(1). M

Nellwyn A. Buck, Petitioner T.C. Memo. 1996-494 · 1996

1551, - 11 - 100 Stat. 2752; see H. Conf. Rept. 99-841, at II-801 (1986), 1986-3 C.B. (Vol. 4) 1, 801. The purpose of the amendment was to conform section 7430 more closely to EAJA. H. Rept. 99-841, supra at II-801, 1986-3 C.B. (Vol. 4) 801. We have consistently held that the "substantially justified" standard is not a departure from the "rea

Henry P. & Darlene C. Brantley, Petitioner T.C. Memo. 1995-564 · 1995

changed the language describing the position of the United States from "unreasonable" to "not substantially justified", the standard applicable to the Equal Access to Justice Act, 28 U.S.C. sec. 2412 (1988). Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551, 100 Stat. 2752; H. Conf. Rept. 99-841, at II-801 (1986), 1986-3 C.B. (Vol. 4) 801. This Court has held that the substantially justified standard does not represent a departure from the reasonableness standard. Sher v. Commissioner, 89 T.C.

Bayer v. Commissioner 98 T.C. 19 · 1992

Beacon Auto Radiator Repair Co. v. Commissioner 52 T.C. 155 · 1969

Hiawatha Home Builders, Inc. v. Commissioner 36 T.C. 491 · 1961

Fairfax Auto Parts of Northern Virginia, Inc. v. Commissioner 65 T.C. 798 · 1976

Southern Dredging Corp. v. Commissioner 54 T.C. 705 · 1970

Russell F. v. Commissioner 97 T.C. 85 · 1991

Pollei v. Commissioner 94 T.C. 595 · 1990

Coastal Petroleum Refiners, Inc. v. Commissioner 94 T.C. 685 · 1990

Dixson International Service Corp. v. Commissioner 94 T.C. 708 · 1990

Gantner v. Commissioner 92 T.C. 192 · 1989

Sokol v. Commissioner 92 T.C. 760 · 1989

VanderPol v. Commissioner 91 T.C. 367 · 1988

Whitesell v. Commissioner 90 T.C. 702 · 1988

Mearkle v. Commissioner 90 T.C. 1256 · 1988

Minahan v. Commissioner 88 T.C. 492 · 1987

Minahan v. Commissioner 88 T.C. 516 · 1987

Moran v. Commissioner 88 T.C. 738 · 1987

Weiss v. Commissioner 88 T.C. 1036 · 1987

Sher v. Commissioner 89 T.C. 79 · 1987

Kennedy v. Commissioner 89 T.C. 98 · 1987

Weiss v. Commissioner 89 T.C. 779 · 1987

Hubbard v. Commissioner 89 T.C. 792 · 1987

Indiana Crop Improvement Ass'n v. Commissioner 76 T.C. 394 · 1981

Your Host, Inc. v. Commissioner 58 T.C. 10 · 1972

Estelle Morris Trusts Nos. 401 through 410 v. Commissioner 51 T.C. 20 · 1968

V. H. Monette & Co. v. Commissioner 45 T.C. 15 · 1965

New England Foundry Corp. v. Commissioner 44 T.C. 150 · 1965

Bush Hog Manufacturing Co. v. Commissioner 42 T.C. 713 · 1964

Wilson v. Commissioner 42 T.C. 914 · 1964

Hamburgers York Road, Inc. v. Commissioner 41 T.C. 821 · 1964

Kessmar Construction Co. v. Commissioner 39 T.C. 778 · 1963

Lester v. Commissioner 40 T.C. 947 · 1963

Concord Supply Corp. v. Commissioner 37 T.C. 919 · 1962

Cronstroms Manufacturing, Inc. v. Commissioner 36 T.C. 500 · 1961

Easson v. Commissioner 33 T.C. 963 · 1960

Sno-Frost, Inc. v. Commissioner 31 T.C. 1058 · 1959