                         T.C. Memo. 1997-465



                       UNITED STATES TAX COURT



         LONE STAR LIFE INSURANCE COMPANY, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos.    14781-96, 5898-97.   Filed October 14, 1997.



     Eleftherios Peter Baker, for petitioner.

     Avery Cousins III and Anthony S. Gasaway, for respondent.


                         MEMORANDUM OPINION

     PANUTHOS, Chief Special Trial Judge:      The case assigned

docket No. 14781-96 is before the Court on respondent's Motion

for Partial Summary Judgment and petitioner's Cross-Motion for

Summary Judgment.   The issue to be decided is whether the period

of limitations expired prior to the issuance of the notice of

deficiency.

     The case assigned docket No. 5898-97 is before the Court on

petitioner's Motion to Dismiss for Lack of Jurisdiction on the
                               - 2 -


ground that the notice of deficiency underlying the petition

constitutes an improper second notice of deficiency under section

6212(c).1

Background2

     During the taxable years 1988 through 1991, Lone Star Life

Insurance Co. was a wholly owned subsidiary of   Hibiscus Life

Insurance Co. (Hibiscus).   Hibiscus timely filed consolidated

Federal income tax returns, Forms 1120L, pursuant to section 1501

for the taxable years 1988, 1989, 1990, and 1991 on September 14,

1989, September 17, 1990, September 16, 1991, and September 14,

1992, respectively.3

     During the years in issue, Hibiscus and petitioner shared

common corporate officers as well as the same mailing address.

In particular, Jerry Marshall served as controller for Hibiscus

and vice president and controller for petitioner, while Gary

Powers served as treasurer for Hibiscus and vice president

(finance and treasurer) for petitioner.

     Revenue Agent Anita Kate Barrett conducted an examination of

Hibiscus' consolidated tax returns for the taxable years 1988


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended. Rule references are to the
Tax Court Rules of Practice and Procedure.
     2
        The following is a summary of the relevant facts that do
not appear to be in dispute; they are stated solely for purposes
of deciding the pending motion and are not findings of fact for
these cases.
     3
        During the years in issue, petitioner was Hibiscus' sole
subsidiary.
                               - 3 -


through 1991 to determine whether it was appropriate to include

petitioner within the Hibiscus consolidated group.    Hibiscus and

petitioner have consistently argued throughout the examination

period and in these proceedings that petitioner was properly

included in the Hibiscus consolidated group during the years in

issue.

     Forms 872

     In February 1992, during the course of the examination,

Revenue Agent Barrett requested that Hibiscus and petitioner

execute separate Forms 872, Consent to Extend the Time to Assess

Tax, for the taxable year 1988.    However, petitioner's

representatives refused to execute a separate Form 872 out of

concern that respondent might attempt to use the document as

evidence that petitioner should not be included in the Hibiscus

consolidated group.   Instead, Hibiscus' representatives executed

a series of Forms 872 that served to extend the period of

assessment for the years in issue to December 31, 1996.      Each of

the Forms 872 in question identifies the taxpayer as "Hibiscus

Life Insurance Co. and Subsidiary".    The following schedule shows

the taxable year, the date executed, and the expiration date for

each of the Forms 872 executed on behalf of Hibiscus:

           Year       Date Executed        Expiration Date

         1988            1/27/92                 9/30/93
         1988-89          7/1/93                 6/30/94
         1988-90        11/11/93                12/31/94
         1988-90         11/1/94                12/31/95
                              - 4 -


         1988-91         5/19/95               6/30/96
         1988-91         1/22/96              12/31/96

     Forms 2848

     On April 12, 1993, Gary Powers executed Form 2848, Power of

Attorney and Declaration of Representative, identifying the

taxpayer as "Hibiscus Life Insurance Co. & Subsidiary" and

appointing David L. Veeder and John K. Cassil as Hibiscus'

attorneys in fact for the taxable years 1989 and 1990.   On July

20, 1993, Gary Powers executed separate Forms 2848 for Hibiscus

and petitioner appointing Messrs. Veeder and Cassil as Hibiscus'

and petitioner's attorneys in fact for the taxable year 1991.    On

September 20, 1993, Gary Powers executed Form 2848, identifying

the taxpayer as "Hibiscus Life Insurance Co. & Subsidiary",

appointing Messrs. Veeder and Cassil as Hibiscus' attorneys in

fact for the taxable year 1988.4

     30-Day Letters

     On April 12, 1993, the District Director issued separate 30-

day letters to Hibiscus and petitioner (along with separate

revenue agent reports (RAR's)) proposing adjustments to their

respective tax liabilities for 1988, 1989, and 1990 on the ground

that Hibiscus and petitioner were not entitled to file



     4
        Gary Powers executed the Forms 872 that were executed on
Jan. 27, 1992, and July 1, 1993, and David L. Veeder executed the
remainder. Gary Powers testified at the hearing of this matter
that in executing the Forms 872, he intended to extend the period
of limitations for the Hibiscus consolidated group.
                               - 5 -


consolidated tax returns for the years 1988 through 1990.   On or

about the same date, the District Director issued separate 30-day

letters and RAR's to Hibiscus and petitioner proposing similar

adjustments to their respective tax liabilities for 1991.   The

RAR's included computations reflecting each entity's corrected

taxable income for each of the years in issue computed on a

separate tax return basis.   In particular, respondent proposed to

determine overpayments with respect to Hibiscus' separate tax

liabilities for 1988 through 1991 and deficiencies with respect

to petitioner's separate tax liabilities for the same periods.

Hibiscus and petitioner filed a joint administrative protest with

respect to the proposed adjustments.

     First Notice of Deficiency

     On April 11, 1996, respondent issued a notice of deficiency

to petitioner determining deficiencies in its Federal income

taxes for the years and in the amounts as follows:

               Year                    Deficiency

               1988                      $397,397
               1989                     2,941,341
               1990                     4,591,998
               1991                     5,658,976

The notice of deficiency includes an explanation of adjustments

which states in pertinent part:

          It is determined that Hibiscus Life Insurance
     Company does not qualify as an insurance company under
     I.R.C. sec. 816 because not more than half of its
     business during the years in question was the issuing
     of insurance or annuity contracts or the reinsuring of
                               - 6 -


     risks underwritten by insurance companies.
     Accordingly, Lone Star Life Insurance Company and
     Hibiscus Life Insurance Company may not file
     consolidated returns.

         It is determined that reinsurance agreements
     between Hibiscus Life Insurance Company and Lone Star
     Life Insurance Company have significant tax avoidance
     effect. This effect is eliminated by disallowing
     Hibiscus's reserves associated with the reinsurance
     agreements pursuant to I.R.C. sec. 845. As a result of
     the disallowance Hibiscus has no reserves and fails to
     qualify as an insurance company under I.R.C. sec. 816.
     Accordingly, Lone Star Life Insurance Company and
     Hibiscus Life Insurance Company may not file
     consolidated returns.

Prior to April 18, 1996, Hibiscus received constructive and

actual notice of the notice of deficiency issued to petitioner.

     Petitioner filed a timely petition for redetermination with

the Court contesting the notice of deficiency.5   The petition

includes an allegation that the notice of deficiency was issued

to petitioner after the expiration of the period of limitations.

Respondent filed an answer to the petition denying that the

period of limitations had expired in this case by virtue of the

Forms 872 that Revenue Agent Barrett obtained during the

examination.   Petitioner in turn filed a reply to respondent's

answer asserting that, as a consequence of respondent's direct

dealing with petitioner during the examination process, the Forms

872 executed by Hibiscus were ineffective to extend the period of

limitations applicable to petitioner.   As indicated, the parties'


     5
        At the time the petition was filed, petitioner maintained
its principal place of business at Dallas, Texas.
                                 - 7 -


dispute respecting the applicability of the period of limitations

is the subject of the parties' cross-motions for summary judgment

filed in docket No. 14781-96.

     Second Notice of Deficiency

     By letter dated December 13, 1996, respondent notified

Hibiscus that respondent would deal directly with petitioner

respecting the latter's tax liabilities for the years 1988, 1989,

1990, and 1991.    In addition, on December 30, 1996, respondent

issued a further notice of deficiency to petitioner determining

deficiencies in petitioner's Federal income taxes for the years

and in the amounts as follows:

                  Year                   Deficiency

                 1989                    $2,932,321
                 1990                     4,591,187
                 1991                     5,658,791

     Petitioner filed a timely petition for redetermination

(assigned docket No. 5898-97) with respect to the second notice

of deficiency.    Shortly thereafter, however, petitioner filed a

motion to dismiss for lack of jurisdiction asserting that the

December 30, 1996, notice of deficiency constitutes an improper

second notice under section 6212(c).       Respondent filed a response

to petitioner's motion to dismiss stating that the December 30,

1996, notice of deficiency was issued as a protective measure out

of concern that the Court might hold the April 11, 1996, notice

of deficiency to be invalid on the basis of respondent's failure
                                - 8 -


to provide Hibiscus with advance, formal notice that respondent

had elected to treat petitioner as having separate filing

status.6

    The parties' motions were called for hearing at the Court's

motions session in Washington, D.C.     Counsel for both parties

appeared at the hearing and presented argument with respect to

the pending motions.   Subsequent to the hearing, petitioner filed

a further written statement with the Court, to which respondent

filed a response.

Discussion

     1. Period of Limitations

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.     Florida Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).     Summary judgment may be

granted with respect to all or any part of the legal issues in

controversy "if the pleadings, answers to interrogatories,

depositions, admissions, and any other acceptable materials,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that a decision may be

rendered as a matter of law."   Rule 121(b); Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);


     6
        Respondent cites INI, Inc. v. Commissioner, T.C. Memo.
1995-112, affd. without published opinion 107 F.3d 27 (11th Cir.
1997), as the cause for concern on this point.
                                - 9 -


Naftel v. Commissioner, 85 T.C. 527, 529 (1985).    The moving

party bears the burden of proving that there is no genuine issue

of material fact, and factual inferences will be read in a manner

most favorable to the party opposing summary judgment.     Dahlstrom

v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982).

     Section 6501(a) sets forth the general rule that an income

tax must be assessed within 3 years after the tax return for the

particular year is filed.    Mecom v. Commissioner, 101 T.C. 374,

381 (1993), affd. without published opinion 40 F.3d 385 (5th Cir.

1994).    However, section 6501(c)(4) provides that the taxpayer

and the Commissioner may consent in writing to extend the normal

3-year period of limitations on assessment and that the tax may

be assessed anytime prior to the expiration of the period agreed

upon.

     The bar of the period of limitations on assessment is an

affirmative defense, and the party raising it is required to

specifically plead the bar and to carry the ultimate burden of

persuasion.    Rule 142(a); Adler v. Commissioner, 85 T.C. 535, 540

(1985).    A taxpayer pleading the bar of the statute of

limitations may establish a prima facie case by showing that the

statutory notice was mailed beyond the normal 3-year period.     The

burden of going forward then shifts to the Commissioner to show

that the bar of the statute of limitations is not applicable.
                              - 10 -


Adler v. Commissioner, supra at 540.   The Commissioner's burden

may be satisfied by the production of a written consent to extend

the period of limitations that is valid on its face.   Concrete

Engg. Co. v. Commissioner, 58 F.2d 566, 568 (8th Cir. 1932),

affg. 19 B.T.A. 212 (1930); Bridges v. Commissioner, T.C. Memo.

1983-763.   Upon such a showing, the burden of going forward with

the evidence then shifts back to the taxpayer to show that the

written consent is invalid or otherwise not binding upon the

taxpayer.   Adler v. Commissioner, supra at 540, and cases cited

therein.

     As previously discussed, petitioner properly raised the bar

of the period of limitations for each of the years 1988 through

1991 in its petition.   Respondent in turn relies upon the Forms

872 executed on behalf of Hibiscus as evidence that the bar of

the period of limitations is not applicable.   Petitioner counters

that the Forms 872 executed on behalf of Hibiscus after April 12,

1993, are not effective to extend the period of limitations with

respect to petitioner's tax liabilities on the ground that

respondent's conduct during the examination (and particularly the

issuance of separate 30-day letters to Hibiscus and petitioner)

terminated the agency relationship between Hibiscus and

petitioner pursuant to the final sentence of section 1.1502-

77(a), Income Tax Regs.
                             - 11 -


     Because there is no dispute as to the material facts

respecting the question of the applicability of the period of

limitations, the issue is ripe for summary adjudication.

     Section 1501, which grants the authority for affiliated

corporations to file consolidated income tax returns, provides

that, upon filing a consolidated return, the members of the

consolidated group consent to all of the consolidated return

regulations prescribed under section 1502.   Section 1502 provides

that the Secretary shall prescribe such regulations as may be

deemed necessary so that the tax liability of an affiliated group

may be returned, determined, computed, assessed, collected, and

adjusted in such a manner as clearly to reflect the income tax

liability.

     Pursuant to the authority granted in section 1502, the

Secretary promulgated section 1.1502-77(a), Income Tax Regs.,

which provides in pertinent part:

     Common parent agent for subsidiaries.--(a) Scope of
     agency of common parent corporation. The common
     parent, for all purposes * * * [other than exceptions
     not applicable here], shall be the sole agent for each
     subsidiary in the group, duly authorized to act in its
     own name in all matters relating to the tax liability
     for the consolidated return year. Except as provided
     in the preceding sentence, no subsidiary shall have
     authority to act for or to represent itself in any such
     matter. * * *; the common parent in its name will give
     waivers, give bonds, and execute closing agreements,
     offers in compromise, and all other documents, and any
     waiver or bond so given, or agreement, offer in
     compromise, or any other document so executed, shall be
     considered as having also been given or executed by
     each such subsidiary. * * * Notwithstanding the
                              - 12 -


     provisions of this paragraph, the district director
     may, upon notifying the common parent, deal directly
     with any member of the group in respect of its
     liability, in which event such member shall have full
     authority to act for itself. [Emphasis added.]

Section 1.1502-77(c), Income Tax Regs., provides:

          (c) Effect of waiver given by common parent. Unless
     the district director agrees to the contrary, an agreement
     entered into by the common parent extending the time within
     which an assessment may be made or levy or proceeding in
     court begun in respect of the tax for a consolidated return
     year shall be applicable--

          (1) To each corporation which was a member of the group
     during any part of such taxable year, and

          (2) To each corporation the income of which was
     included in the consolidated return for such taxable year,
     notwithstanding that the tax liability of any such
     corporation is subsequently computed on the basis of a
     separate return under the provisions of sec. 1.1502-75.

In sum, the common parent of an affiliated group of corporations

filing a consolidated return generally is treated as the sole

agent for its subsidiaries and may execute a consent to extend

the period of limitations on behalf of the consolidated group.

However, a subsidiary shall have full authority to act for itself

where the Commissioner notifies the common parent that the

Commissioner will deal directly with the subsidiary in respect of

its tax liability.   See Craigie, Inc. v. Commissioner, 84 T.C.

466, 474-475 (1985).

     The parties disagree whether the issuance of separate 30-day

letters and RAR's to Hibiscus and petitioner during the

examination stage of the case constitutes direct dealing between
                              - 13 -


respondent and petitioner, and notice of the same to Hibiscus,

within the meaning of the final sentence of section 1.1502-77(a),

Income Tax Regs.   Respondent contends in the alternative that,

regardless of the applicability of section 1.1502-77(a), Income

Tax Regs., the Court should conclude that the period of

limitations did not expire in this case on the grounds that:

(1) The disputed Forms 872 should be enforced to the extent they

reflect the parties' mutual assent to extend the period of

limitations; and (2) petitioner subsequently ratified the Forms

872 executed on behalf of Hibiscus.

     Relying on cases such as Barbados #7 Ltd. v. Commissioner,

92 T.C. 804 (1989); Halper v. Commissioner, T.C. Memo. 1997-58;

and Malone & Hyde, Inc. v. Commissioner, T.C. Memo. 1992-661,

petitioner counters that respondent's reliance on the parties'

mutual assent and/or the doctrine of ratification is misplaced.

Petitioner, in its written statement filed subsequent to the

hearing herein, states:

          Respondent's arguments as to mutual assent and
     ratification are based upon the intent of the parties.
     That is, respondent asserts that the consents were
     intended to extend the period of limitations for the
     separate tax liabilities of both members of the
     Hibiscus consolidated group, that Hibiscus' authority
     was not disavowed by petitioner, and that the actions
     of Hibiscus and petitioner taken upon the assumption
     that the necessary authority existed amount to
     ratification of the consents. However, the issue
     presented by the instant motions is not one of intent,
     but instead is whether Hibiscus at the time of its
     execution of the consents was vested with the authority
     to do so. Petitioner submits that as a result of
                              - 14 -


     respondent's decision to deal separately with
     petitioner, and his notification to Hibiscus of same,
     Hibiscus lacked the requisite authority to execute the
     consents and that respondent is charged with knowledge
     of that lack of authority. Accordingly, while the
     elements relied upon by respondent may well be of
     significance in another context, 'neither intent nor
     failure to disavow nor ratification can create a power
     that by law does not and cannot exist.' Malone & Hyde,
     Inc. v. Commissioner, T.C. Memo. 1992-661, 64 TCM 1309
     at 1316.

In sum, petitioner contends that respondent's purported direct

dealing with petitioner within the meaning of the last sentence

of section 1.1502-77(a), Income Tax Regs., precluded Hibiscus

from continuing to act as agent for petitioner in any respect.

We disagree.

     The flaw in petitioner's position, and the factor that

serves to distinguish the present case from the cases relied upon

by petitioner, is petitioner's erroneous assumption that Hibiscus

(and its agents) lacked the legal capacity to act as petitioner's

agent.   We return to the final sentence of section 1.1502-77(a),

Income Tax Regs., which provides:   "Notwithstanding the

provisions of this paragraph, the district director may, upon

notifying the common parent, deal directly with any member of the

group in respect of its liability, in which event such member

shall have full authority to act for itself."   (Emphasis added.)

Even assuming for the sake of argument that Hibiscus' authority

to act as petitioner's agent was terminated in April 1993

pursuant to this provision, we see no basis for interpreting the
                              - 15 -


regulation (and particularly the language quoted above) as a

legal bar to the reinstatement of an agency relationship between

Hibiscus and petitioner.   In other words, while the final

sentence of section 1.1502-77(a), Income Tax Regs., provides that

a subsidiary member of a consolidated group shall have full

authority to act for itself, the provision does not preclude a

subsidiary from allowing its parent to continue to act as its

agent.

     Consistent with the foregoing, it follows that the cases

that petitioner relies upon, cases in which the ostensible agent

lacked the legal capacity to continue to act as an agent, are

inapposite.   See Barbados #7 Ltd. v. Commissioner, supra

(TMP/agent's authority terminated upon bankruptcy); Halper v.

Commissioner, supra (agent's authority terminated as consequence

of principal's mental incapacity); Malone & Hyde, Inc. v.

Commissioner, supra (agent's authority terminated upon merger of

corporation/principal with another corporation).

     We are satisfied that the undisputed facts demonstrate that

the consents in dispute are valid and binding on petitioner based

upon the theories of mutual assent or ratification.   Consistent

with Gary Powers' testimony on the point, petitioner does not

dispute that the consents were executed with the intent of

extending the period of limitations for the Hibiscus consolidated

group.   Moreover, Gary Powers' dual role as treasurer for
                             - 16 -


Hibiscus and vice president (finance and treasurer) for

petitioner,7 and the prominent role that he played in executing

both consents and appointing attorneys in fact to act for the

Hibiscus consolidated group during the period in question,

provide ample support for the conclusion that petitioner ratified

the consents executed by Hibiscus.8   See Mishawaka Properties Co.

v. Commissioner, 100 T.C. 353, 365-367 (1993) (validity of a

petition for readjustment filed by a partner other than the tax

matters partner sustained based upon principle of implied

ratification); Kraasch v. Commissioner, 70 T.C. 623, 628 (1978)

(taxpayers ratified accountant's act of filing petition on their

behalf).



     7
        As a corporate officer, Gary Powers had apparent
authority to act as agent for both Hibiscus and petitioner.    See,
e.g., Bugaboo Timber Co. v. Commissioner, 101 T.C. 474, 486
(1993).

     8
        Significantly, during April 1993, the same time that
respondent had issued separate 30-day letters to Hibiscus and
petitioner, and later in July and September 1993, Gary Powers
executed a series of Forms 2848 appointing Messrs. Veeder and
Cassil as attorneys in fact for "Hibiscus Co. and Subsidiary" for
the taxable years 1988, 1989, and 1990, and separate powers of
attorney appointing Messrs. Veeder and Cassil as attorneys in
fact for Hibiscus and petitioner for the taxable year 1991. Gary
Powers was aware that David Veeder executed further consents to
extend the period of limitations on behalf of "Hibiscus Co. and
Subsidiary." Considering all of the facts and circumstances,
Gary Powers' silence respecting his authority, as well as that of
David Veeder, to act as agent for petitioner and to execute
consents on behalf of petitioner serves as petitioner's
ratification of Gary Powers' execution of the powers of attorney
as well as the consents executed on its behalf.
                              - 17 -


     In sum, we hold that the Forms 872 that Hibiscus executed

were effective to extend the period of limitations on behalf of

petitioner.   Consequently, we will grant respondent's Motion for

Partial Summary Judgment and deny petitioner's Cross-Motion for

Summary Judgment filed in docket No. 14781-96.

     2. Petitioner's Motion To Dismiss for Lack of Jurisdiction
Filed in Docket No. 5898-97

     The remaining question to be decided is whether the December

30, 1996, notice of deficiency that is the basis for the petition

assigned docket No. 5898-97 is an invalid second notice of

deficiency under section 6212(c).   Resolution of this issue turns

largely upon the question of the validity of the April 11, 1996,

notice of deficiency that is the subject of the petition assigned

docket No. 14781-96.   As previously mentioned, respondent issued

the notice of deficiency dated December 30, 1996, out of concern

that the Court might find the April 11, 1996, notice of

deficiency to be invalid based upon statements contained in INI,

Inc. v. Commissioner, T.C. Memo. 1995-112, affd. without

published opinion 107 F.3d 27 (11th Cir. 1997), to which we now

turn.

     In INI, Inc. v. Commissioner, supra, the Commissioner

adopted inconsistent alternative positions by issuing one notice

of deficiency to the common parent of a consolidated group of

corporations and a second notice of deficiency to a subsidiary

corporation based on separate filing status.   Separate petitions
                               - 18 -


for redetermination were filed with the Court with respect to

each notice.   However, INI, Inc. (INI), the subsidiary

corporation, subsequently challenged the validity of the notice

of deficiency that respondent had issued to INI on the ground

that the separate notice was issued in violation of section

1.1502-77(a), Income Tax Regs.

     Contrary to INI's position, the Court sustained the validity

of the notice of deficiency.   In particular, although recognizing

that a common parent of a consolidated group of corporations

normally serves as agent for its subsidiaries, the Court observed

that a copy of the notice of deficiency issued to INI was

contemporaneously furnished to the common parent corporation.

Under the circumstances, the Court concluded that the notice of

deficiency was validly issued pursuant to the consolidated return

regulations on the ground that it served as notice to the common

parent corporation that respondent intended to deal directly with

INI pursuant to the final sentence of section 1.1502-77(a),

Income Tax Regs.

     Applying similar reasoning in the present case, we conclude

that the April 11, 1996, notice of deficiency issued to

petitioner is valid.   Of course, the facts in the present case

can be distinguished from those of INI, Inc. v. Commissioner,

supra, insofar as respondent did not directly furnish Hibiscus

with a copy of the April 11, 1996, notice of deficiency.
                                - 19 -


However, considering that Hibiscus and petitioner shared

corporate officers and the same address, we are satisfied that

delivery of the April 11, 1996, notice of deficiency to

petitioner also served to provide Hibiscus with timely notice of

respondent's determination to deal directly with petitioner in

respect of its tax liabilities for the years in issue within the

meaning of section 1.1502-77(a), Income Tax Regs.9   Consequently,

we conclude that the April 11, 1996, notice of deficiency is

valid.   INI, Inc. v. Commissioner, supra.

     Section 6212(c) provides that, with exceptions not

applicable here, if the Secretary has mailed to the taxpayer a

notice of deficiency, and the taxpayer files a timely petition

with the Tax Court, the Secretary shall have no right to issue a

further notice of deficiency to the taxpayer for the same taxable

year.    See McCue v. Commissioner, 1 T.C. 986, 987-988 (1943).

Consistent with our holding that the April 11, 1996, notice of

deficiency is valid, and considering petitioner's timely petition

for redetermination assigned docket No. 14781-96, it follows that

the December 30, 1996 notice of deficiency is an invalid second

notice of deficiency within the meaning of section 6212(c).

McCue v. Commissioner, supra.    Accordingly, we will grant

petitioner's Motion to Dismiss for Lack of Jurisdiction filed in


     9
        The parties agree that Hibiscus had actual or
constructive notice of the Apr. 11, 1996, notice of deficiency by
Apr. 18, 1996.
                             - 20 -


docket No. 5898-97, and we will dismiss that docket for lack of

jurisdiction on the ground that the underlying notice of

deficiency is invalid.

     To reflect the foregoing,

                             An order denying petitioner's Cross-

                         Motion for Summary Judgment and granting

                         respondent's Motion for Partial Summary

                         Judgment will be issued in docket No.

                         14781-96, and an order granting

                    petitioner's Motion to Dismiss for Lack

                         of Jurisdiction will be entered in

                         docket No. 5898-97.
