1. Answer: The instructor should compare Cowan, 54 TC 647 (1970), CCH Dec. 30,030, Roberts v.
Commissioner, TC Memo 1998-301 and Levy, 76 TC 228 (1981), CCH Dec. 37,676, to determine which
factor is controlling. Levy seems to require either an extended stay outside the country or a delay in
receipt of the notice. However, its policy considerations would appear to support Procrastinator.
2. Answer: Leroy may not dismiss his petition with the Tax Court and file a claim for refund. Once a
petition to the Tax Court is filed, that Court obtains exclusive jurisdiction except for appeals. One
should advise Leroy, however, that the District Court decision, although not binding on the Tax
Court, should be cited as precedent and may be influential. Generally, the Tax Court will be bound by
a decision of the Appellate Court within the taxpayer’s jurisdiction and a lack of appeal by the
government in the District Court refund suit may be argued as an assumption that the government
did not believe it could win an appeal.
3. Answer: Question 3 represents what is commonly called a “whipsaw position by the IRS. Generally,
the IRS will allow the parties to in essence try their own case against each other and simply await
resolution. Either way, the IRS’s interests are protected.
(A) Answer: Mr. Scatterbrain, former president, may not be liable depending on whether the
liability accrued during the month of April. If deposits for April were made, the Philipson and
Seaton cases seem to indicate that he should not be held responsible. See Philipson v. United
States, (DC-N.Y. 1955) 55-1 USTC ¶9466; Cellura v. United States, (DC-Ohio 1965) 65-2 USTC