Lloyd M. Shumaker v. Commissioner of Internal Revenue

The Tax Court upheld the Commissioner’s statutory notice of a tax deficiency to Lloyd Shumaker for 1972 and 1973. Shumaker appeals, disputing the jurisdiction of this court, the characterization of the income from his wheat sale as ordinary income, the imposition of the self-employment tax for 1973, and the disallowance of a business interest deduction.

I

The IRS’s acceptance of Shumaker’s amended tax returns for 1972 and 1973 and its issuance of tax adjustment statements crediting him the amount in controversy did not end the controversy and moot the case as he contends. IRS regulations establish the procedures for closing agreements and compromises pursuant to 26 U.S.C. §§ 7121, 7122. Treas.Reg. §§ 301.-7121-1, 301.7122-1 (1967). These procedures are exclusive. Botany Mills v. United States, 278 U.S. 282, 288-89 , 49 S.Ct. 129, 131-32 , 73 L.Ed. 379 (1929).

Neither the informal acceptance of Shumaker’s amended returns nor the adjustments to his tax crediting him with the amount in controversy constitute a binding agreement under the tax laws. Id. See Bowling v. United States, 510 F.2d 112, 113 (5th Cir. 1975); Dorl v. Commissioner, 507 F.2d 406, 407 (2d Cir. 1974). The full…