                        T.C. Memo. 1999-260



                      UNITED STATES TAX COURT



    LLOYD L. BARBER, JR. AND JANET M. BARBER, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7197-98.                      Filed August 4, 1999.



     Lloyd L. Barber, Jr. and Janet M. Barber, pro sese.

     Stephen Baker, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     JACOBS, Judge:   Respondent determined a $2,422 deficiency in

petitioners' 1995 Federal income tax.

     The issue for decision concerns petitioners' entitlement to a

deduction on their individual 1995 Federal tax return for claimed

losses incurred by Legal Search, Inc., all the stock of which is
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owned by Lloyd L. Barber (petitioner).      Resolution of this issue

depends upon whether a timely election on Form 2553 was filed on

behalf of the corporation.

     All section references are to the Internal Revenue Code in

effect for the years under consideration.    All Rule references are

to the Tax Court Rules of Practice and Procedure.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.    The

stipulation of facts and the attached exhibits are incorporated

herein by this reference.

     At the time petitioners filed their petition, they resided in

Anchorage, Alaska.

     Legal Search, Inc. (Legal Search) was incorporated in Alaska

on December 2, 1993.    It performed legal research and prepared

legal documents through petitioner, a self-taught paralegal.

     Respondent's records do not reflect that an election was ever

made by Legal Search on Form 2553 for treatment as a small business

corporation. (A May 18, 1999, Certification of Lack of Record to

this effect was secured from the Custodian of Records for the Ogden

Service Center and is part of the record.)

     On April 17, 1996, the Internal Revenue Service (IRS) received

petitioners' Federal income tax return, Form 1040, for 1995.      On

the return, petitioners reported an $8,613 pass-through loss from

Legal Search, which petitioners claim is an S corporation. Because
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the IRS had no record of an election for S corporation status for

Legal Search, on January 30, 1998, respondent mailed petitioners a

notice of deficiency disallowing the claimed $8,613 deduction.

                                  OPINION

      The ultimate dispute herein involves whether a timely election

was made by Legal Search to be treated as an S corporation.              See

sec. 1362. If so, petitioners properly claimed a deduction for the

loss attributable to Legal Search on their 1995 Federal income tax

return. See sec. 1366. If not, respondent properly disallowed the

deduction.

      Section 1362(a)(1) allows a small business corporation, as

defined pursuant to section 1361, to elect S corporation status.

An S corporation election can be made for any taxable year at any

time during the preceding taxable year or on or before the 15th day

of   the   third   month   of   the    current   taxable   year.   See   sec.

1362(b)(1).    These time limits were imposed so that a corporation

could not make an election after it could predict its profitability

for the year with any certainty.              Thus, this time restraint

prevented taxpayers from using S corporation status solely as a

tax-avoidance mechanism.        See H. Rept. 95-1445, at 104 (1978),

1978-3 C.B. (Vol. 1) 181, 278.

      A corporation that elects to take advantage of the benefits of

being treated as an S corporation must comply with the requirements

for making the election.        See, e.g., Garrett & Garrett, P.C. v.
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Commissioner, T.C. Memo. 1993-453.      Under section 1362(a), a

corporation elects to be treated as an S corporation by filing a

Form 2553.   No election is recognized in the absence of the timely

filing of a Form 2553.    See, e.g., Mitchell Offset Plate Serv.,

Inc. v. Commissioner, 53 T.C. 235, 238-240 (1969); Fankhauser v.

Commissioner, T.C. Memo. 1998-328.1      Generally, a document is

considered filed with the IRS when it is received by that agency.

See, e.g., United States v. Lombardo, 241 U.S. 73, 76 (1916).

     Petitioners seek the benefit of special statutory provisions

that are dependent upon the timely filing of a Form 2553.     See,

e.g., Pestcoe v. Commissioner, 40 T.C. 195, 198 (1963). The burden

of proving the filing of Form 2553 with the IRS falls upon

petitioners.

     Although petitioners argue that they sent the Form 2553 by

regular mail on December 3, 1993, they concede that they have no

written evidence of such mailing.   Petitioner was the sole witness

at trial; we are not required to accept his self-serving testimony,

and we do not.   See, e.g., Geiger v. Commissioner, 440 F.2d 688,

689-690 (9th Cir. 1971), affg. per curiam T.C. Memo. 1969-159.




     1
          In certain instances where a form that must be
delivered to the Internal Revenue Service (IRS) by a specific
date is delivered to the IRS by U.S. mail after the date it is to
be received, the date of the postmark is deemed to be the date of
delivery. See sec. 7502.
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     Petitioners failed to present any corroborating evidence as to

the purported mailing of Form 2553. See Anderson v. United States,

966 F.2d 487, 491 (9th Cir. 1992) (holding that under the common-

law mailbox rule, a rebuttable presumption of delivery arises where

there is evidence of timely mailing).     As a paralegal who owned a

business that prepared legal documents, petitioner should have

understood the significance of complying with the requirements for

Legal Search's making an S corporation election.      He should have

taken steps to verify that the election was properly made.        He

failed to do so.

     At trial, respondent presented credible evidence that the Form

2553 was not delivered.       Consequently, we hold that petitioners

have failed to satisfy their burden and thus may not deduct the

claimed 1995 loss arising from Legal Search.

     On their 1994 Federal income tax return, petitioners reported

a $25,565 loss arising from Legal Search's activities and received

a $1,783 refund.   Petitioners alternatively maintain that because

the IRS did not challenge the loss reflected on their 1994 tax

return, pursuant to the doctrine of equitable estoppel, the IRS

cannot now argue that for tax year 1995, Legal Search is not an S

corporation.   We disagree.
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         Equitable estoppel2 is a judicial doctrine that precludes a

party from denying that party's own acts or representations which

induced another to act to his or her detriment.          See Hofstetter v.

Commissioner, 98 T.C. 695, 700 (1992).         The doctrine of equitable

estoppel is applied against the Government only with utmost caution

and restraint.       See, e.g., Kronish v. Commissioner, 90 T.C. 684,

695 (1988).       The burden of proof is on the party claiming estoppel

against     the     Government.   See   Rule   142(a);     Hofstetter     v.

Commissioner, supra at 701.

     Petitioners have failed to carry their burden.           It is of no

import that the 1994 deduction for loss arising from Legal Search

was accepted by the IRS.      Each tax year is a separate matter.       See,

e.g., Commissioner v. Sunnen, 333 U.S. 591, 597 (1948); Harrah's

Club v. United States, 228 Ct. Cl. 650, 661 F.2d 203, 205 (1981).

Thus, petitioners' estoppel argument is without merit.




     2
          Taxpayers must prove at least the following elements
before courts will apply equitable estoppel against the
Government: (1) A false representation or wrongful, misleading
silence by the party against whom the estoppel is claimed; (2) an
error in a statement of fact and not in an opinion or statement
of law; (3) the taxpayer's ignorance of the true facts; (4) the
taxpayer's reasonable reliance on the acts or statements of the
one against whom estoppel is claimed; and (5) adverse effects
suffered by the taxpayer from the acts or statements of the one
against whom estoppel is being claimed. See, e.g., Norfolk S.
Corp. v. Commissioner, 104 T.C. 13, 60, supplemented by 104 T.C.
417 (1995), affd. 140 F.3d 240 (4th Cir. 1998).
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To reflect the foregoing,



                                         Decision will be

                                    entered for respondent.
