Nos. 254-03, 256-03 | Tax Ct. | Feb 28, 2005
Commissioner's disallowance of deductions claimed by taxpayer, sustained. Commissioner's penalty assessments, overruled.
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:
Faramarz Elghanian
Addition to Tax and Penalty
Year Deficiency
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's 2 loss on the expropriation of his family's2005 Tax Ct. Memo LEXIS 34">35' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">35 ' number="2" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*35 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
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners were married and resided in France when2005 Tax Ct. Memo LEXIS 34">36' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">36 ' number="3" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*36 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 green card application, petitioner said that he intended to study in the United States and stay as an immigrant. The United States2005 Tax Ct. Memo LEXIS 34">37' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">37 ' number="4" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*37 issued a green card 6 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.
2005 Tax Ct. Memo LEXIS 34">38' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">38 ' number="5" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*38 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 visa 7 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. While in Florida, petitioner obtained a license to buy and sell real estate.
Petitioner went to Iran about2005 Tax Ct. Memo LEXIS 34">39' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">39 ' number="6" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*39 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 States. 2005 Tax Ct. Memo LEXIS 34">40' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">40 ' number="7" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*40 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 a2005 Tax Ct. Memo LEXIS 34">41' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">41 ' number="8" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*41 date not clear from the record.
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.
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
2005 Tax Ct. Memo LEXIS 34">42' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">42 ' number="9" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*42 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 leaving2005 Tax Ct. Memo LEXIS 34">43' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">43 ' number="10" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*43 Iran, petitioner went to London to see Shirley Elghanian and Roya. He stayed there for a few weeks. On August 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
2005 Tax Ct. Memo LEXIS 34">44' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">44 ' number="11" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*44 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.
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.
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 claimed2005 Tax Ct. Memo LEXIS 34">45' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">45 ' number="12" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*45 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.
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 in2005 Tax Ct. Memo LEXIS 34">46' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">46 ' number="13" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*46 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 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 for2005 Tax Ct. Memo LEXIS 34">47' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">47 ' number="14" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*47 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.
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 Form2005 Tax Ct. Memo LEXIS 34">48' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">48 ' number="15" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*48 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.
Petitioner filed returns for 1987-89, and petitioners2005 Tax Ct. Memo LEXIS 34">49' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">49 ' number="16" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*49 filed joint returns for 1990-91 in which they reported the following:
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
1990 719,826 31,905 (3,000) (79,383) (25,850)
1991 6,921 133,587 16,136 $ 958 (3,000) (447)
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 United2005 Tax Ct. Memo LEXIS 34">50' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">50 ' number="17" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*50 States.
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
To be a deductible loss under
Petitioners contend that the expropriation loss2005 Tax Ct. Memo LEXIS 34">51' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">51 ' number="18" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*51 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.
2005 Tax Ct. Memo LEXIS 34">52' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">52 ' number="19" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*52 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.
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.
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 resident2005 Tax Ct. Memo LEXIS 34">54' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">54 ' number="21" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*54 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.
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.
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 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.
2005 Tax Ct. Memo LEXIS 34">56' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">56 ' number="23" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*56 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.
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
Petitioners point out that we have2005 Tax Ct. Memo LEXIS 34">58' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">58 ' number="25" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*58 held that a taxpayer who entered the United States under a student visa was a U.S. resident.
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 continuously2005 Tax Ct. Memo LEXIS 34">59' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">59 ' number="26" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*59 involved in business, personal, social, or political affairs in the United States. Cf.
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.
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
3. Conclusion
We conclude that petitioner was not a U.S. resident in 1979.
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 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
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.
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.
2005 Tax Ct. Memo LEXIS 34">63' document="" elghanian-v-commr-4335290?utm_source='webapp"' https:="" label='2005 Tax Ct. Memo LEXIS 34">63 ' number="30" pagescheme="<a href=">2005 Tax Ct. Memo LEXIS 34">*63 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.
Respondent contends that petitioner is liable for the addition to tax under
We conclude that petitioner is not liable for the addition to tax under
Decisions will be entered under
Footnotes
1. These cases were consolidated for trial, briefing, and opinion.↩
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.↩
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" court="9th Cir." date_filed="1985-10-18" href="https://app.midpage.ai/document/donald-joe-moorhead-dba-don-moorhead-harvesting-company-v-united-states-of-america-clifton-gattis-dba-packing-company-v-united-states-459049?utm_source=webapp" opinion_id="459049">774 F.2d 936 ">774 F.2d 936" court="9th Cir." date_filed="1985-10-18" href="https://app.midpage.ai/document/donald-joe-moorhead-dba-don-moorhead-harvesting-company-v-united-states-of-america-clifton-gattis-dba-packing-company-v-united-states-459049?utm_source=webapp" opinion_id="459049">774 F.2d 936, 774 F.2d 936" court="9th Cir." date_filed="1985-10-18" href="https://app.midpage.ai/document/donald-joe-moorhead-dba-don-moorhead-harvesting-company-v-united-states-of-america-clifton-gattis-dba-packing-company-v-united-states-459049?utm_source=webapp" opinion_id="459049">774 F.2d 936">938-939 n. 4 (9th Cir. 1985);Gooch v. Clark, 433 F.2d 74" court="9th Cir." date_filed="1970-12-01" href="https://app.midpage.ai/document/joe-gooch-v-ramsey-clark-292723?utm_source=webapp" opinion_id="292723">433 F.2d 74 ">433 F.2d 74" court="9th Cir." date_filed="1970-12-01" href="https://app.midpage.ai/document/joe-gooch-v-ramsey-clark-292723?utm_source=webapp" opinion_id="292723">433 F.2d 74, 433 F.2d 74" court="9th Cir." date_filed="1970-12-01" href="https://app.midpage.ai/document/joe-gooch-v-ramsey-clark-292723?utm_source=webapp" opinion_id="292723">433 F.2d 74">76 (9th Cir. 1970); see alsosec. 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 & Rosenfield,Immigration Law and Procedure, sec. 6.10d (rev. ed. 1959) andsec. 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">66 Stat. 163 , 168;8 U.S.C. sec. 1101(a)(15)(F) ;8 C.F.R. sec. 214.2(f)(5)↩ .8. For a more detailed account of these events in Iran, see
Contl. Ill. Corp. v. Commissioner, 94 T.C. 165" court="Tax Ct." date_filed="1990-02-28" href="https://app.midpage.ai/document/continental-illinois-corp-v-commissioner-4486389?utm_source=webapp" opinion_id="4486389">94 T.C. 165 ">94 T.C. 165" court="Tax Ct." date_filed="1990-02-28" href="https://app.midpage.ai/document/continental-illinois-corp-v-commissioner-4486389?utm_source=webapp" opinion_id="4486389">94 T.C. 165 (1990);Halliburton Co. v. Commissioner, 93 T.C. 758" court="Tax Ct." date_filed="1989-12-26" href="https://app.midpage.ai/document/halliburton-co-v-commissioner-4486376?utm_source=webapp" opinion_id="4486376">93 T.C. 758 ">93 T.C. 758" court="Tax Ct." date_filed="1989-12-26" href="https://app.midpage.ai/document/halliburton-co-v-commissioner-4486376?utm_source=webapp" opinion_id="4486376">93 T.C. 758 (1989), affd.946 F.2d 395" court="5th Cir." date_filed="1991-11-04" href="https://app.midpage.ai/document/halliburton-company-v-commissioner-of-internal-revenue-569326?utm_source=webapp" opinion_id="569326">946 F.2d 395 ">946 F.2d 395" court="5th Cir." date_filed="1991-11-04" href="https://app.midpage.ai/document/halliburton-company-v-commissioner-of-internal-revenue-569326?utm_source=webapp" opinion_id="569326">946 F.2d 395 (5th Cir. 1991); andMoshrefzadeh-Sani v. Commissioner, T.C. Memo. 1992-592↩ .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">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) ; seeElsaesser v. Commissioner, T.C. Memo. 1978-2 (applies8 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. Seesec. 101(a)(15)(B) of the Immigration and Nationality Act,66 Stat. 168">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.) ; seeDillin v. Commissioner, 56 T.C. 228" court="Tax Ct." date_filed="1971-05-06" href="https://app.midpage.ai/document/dillin-v-commissioner-4481803?utm_source=webapp" opinion_id="4481803">56 T.C. 228 ">56 T.C. 228" court="Tax Ct." date_filed="1971-05-06" href="https://app.midpage.ai/document/dillin-v-commissioner-4481803?utm_source=webapp" opinion_id="4481803">56 T.C. 228, 56 T.C. 228" court="Tax Ct." date_filed="1971-05-06" href="https://app.midpage.ai/document/dillin-v-commissioner-4481803?utm_source=webapp" opinion_id="4481803">56 T.C. 228">243 (1971) (discussing B visas and applying22 C.F.R. sec. 41.25 (1970 ed.)↩ ).10. Petitioners bear the burden of proof on the residence and expropriation loss issues.
Rule 142(a) ;Welch v. Helvering, 290 U.S. 111" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">290 U.S. 111 ">290 U.S. 111" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">290 U.S. 111, 290 U.S. 111" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">290 U.S. 111">115, 78 L. Ed. 212" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">78 L. Ed. 212">78 L. Ed. 212" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">78 L. Ed. 212, 54 S. Ct. 8" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">54 S. Ct. 8">54 S. Ct. 8" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">54 S. Ct. 8, 2 C.B. 112" court="SCOTUS" date_filed="1933-11-06" href="https://app.midpage.ai/document/welch-v-helvering-102139?utm_source=webapp" opinion_id="102139">2 C.B. 112">1933-2 C.B. 112 (1933). The burden of proof for a factual issue may shift to the Commissioner under certain circumstances.Sec. 7491(a) . Petitioners do not contend thatsec. 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">98 Stat. 672↩ .12. Immigration and Nationality Act (1952), ch. 477,
sec. 101(a)(15)(F), 66 Stat. 168">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.]↩
13. Immigration and Nationality Act (1952), ch. 477,
sec. 101(a)(15)(B), 66 Stat. 167">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" court="D.D.C." date_filed="1952-05-22" href="https://app.midpage.ai/document/zacharias-v-mcgrath-8716204?utm_source=webapp" opinion_id="8716204">105 F. Supp. 421 ">105 F. Supp. 421" court="D.D.C." date_filed="1952-05-22" href="https://app.midpage.ai/document/zacharias-v-mcgrath-8716204?utm_source=webapp" opinion_id="8716204">105 F. Supp. 421, 427↩ (D.D.C. 1952) (presumption of regularity applies to immigration matters).