                        T.C. Memo. 2008-16



                      UNITED STATES TAX COURT



             ESTATE OF MARVIN E. GREENFIELD, DECEASED,
         BARBARA GREENFIELD, PERSONAL REPRESENTATIVE, AND
                 BARBARA GREENFIELD, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20423-04.               Filed January 31, 2008.



     Frank Agostino, for petitioners.

     Joseph J. Boylan, for respondent.



                        MEMORANDUM OPINION


     LARO, Judge:   This case was submitted to the Court under

Rule 122 for decision without trial.1    Petitioners petitioned the



     1
      Rule references are to the Tax Court Rules of Practice and
Procedure. Unless otherwise noted, section references are to the
applicable versions of the Internal Revenue Code.
                               - 2 -

Court to redetermine a 1982 income tax deficiency of $29,063 and

the applicability of an increased rate of interest under section

6621(c) due to substantial underpayment of tax attributable to a

tax-motivated transaction.   We decide whether the period of

limitations remains open for assessment of those items.   We hold

that it does.

                             Background

     All facts were stipulated or contained in the exhibits

submitted with the stipulations.   The stipulated facts and

exhibits are incorporated herein by this reference.

     Barbara and Marvin E. Greenfield (separately, Ms. Greenfield

and Mr. Greenfield; together, the Greenfields) were husband and

wife in the year at issue, 1982.   Mr. Greenfield died on February

28, 2006.   At the time of the filing of the petition, the

Greenfields’ mailing address was in Florida.

     On or about August 12, 1983, the Greenfields filed a timely

joint 1982 Form 1040, U.S. Individual Income Tax Return, with the

Atlanta Service Center (Greenfields’ tax return).   The

Greenfields’ tax return included flowthrough losses from various

partnerships known as the Mast Realty Associates Partnerships.

     Respondent selected the Mast Realty Associates Partnerships

for audit and solicited a Form 872-A, Special Consent to Extend

the Time to Assess Tax, from the Greenfields to extend the period

of limitations for the Greenfields’ tax return.   The Greenfields
                               - 3 -

signed the Form 872-A on June 10, 1986.     On or before June 24,

1986, respondent countersigned the Form 872-A and returned a copy

to petitioners.   The Greenfields never submitted a Form 872-T,

Notice of Termination of Special Consent to Extend the Time to

Assess Tax, to respondent for the Greenfields’ tax return.

     Respondent eventually determined that the Greenfields’

distributive share of income for 1982 from the Mast Realty

Associates Partnerships should be increased by $62,186 and that

any deficiency related to the determination is subject to an

increased rate of interest under section 6621(c).     On July 30,

2004, respondent mailed a notice of deficiency to the Greenfields

for 1982 reflecting the determination.     Subsequently, respondent

determined that Ms. Greenfield qualified under section 6015 for

relief from any joint and several tax liability for 1982.

     On September 19, 1992, Mr. Greenfield filed a petition under

chapter 11 of the Bankruptcy Code.     On January 11, 1993,

respondent filed a proof of claim in Mr. Greenfield’s bankruptcy

case (first proof of claim).   On October 21, 1993, Mr. Greenfield

objected to respondent’s first proof of claim, and on or about

November 9, 1993, respondent consented to the disallowance of

respondent’s first proof of claim.

     Also on November 9, 1993, respondent filed a second proof of

claim in Mr. Greenfield’s bankruptcy proceeding (second proof of

claim).   The second proof of claim asserted an unsecured priority
                               - 4 -

claim totaling $34,150.32 for 1983 and 1984.    On April 14, 1994,

Mr. Greenfield’s action under chapter 11 of the Bankruptcy Code

was converted to a bankruptcy liquidation under chapter 7.

     On August 15, 1994, respondent filed a third proof of claim

in Mr. Greenfield’s bankruptcy proceeding (third proof of claim).

Respondent’s third proof of claim asserted an unsecured priority

claim totaling $216,386.49 and an unsecured general claim

totaling $19,601.28 for 1983, 1984, and 1991.

     On November 18, 1997, the U.S. Bankruptcy Court for the

Southern District of Florida issued a “Discharge of Debtor(s)”.

On July 19, 2000, the bankruptcy trustee paid respondent

$29,683.67 in satisfaction of respondent’s unsecured priority

claim of $216,386.49.   On July 21, 2000, respondent advised the

Greenfields by correspondence that their only open Federal tax

lien was filed in July 1995.

     On April 25, 2006, the Estate of Marvin E. Greenfield filed

a Form 4810, Request for Prompt Assessment Under Internal Revenue

Code Section 6501(d), for the income tax years 1980 to 1986

inclusive.   In response to that request, on October 11, 2006, in

correspondence directed to the Greenfields, respondent mistakenly

stated that the period of limitations for 1982 had already

expired.
                                - 5 -

                             Discussion

     We decide whether respondent timely issued the notice of

deficiency to the Greenfields within the applicable period of

limitations provided by section 6501(a).    Respondent argues that

the notice of deficiency was timely because the Greenfields’

execution of Form 872-A extended the period of limitations under

section 6501(c)(4).    Petitioners argue that the notice of

deficiency was untimely.    Alternatively, petitioners argue, the

extension, if effective, applies only to the tax deficiency and

not to the increased rate of interest.    We conclude that the

notice of deficiency was timely.    We also conclude that the Form

872-A applies to both the income tax deficiency and the increased

rate of interest.

A.   Burden of Proof

     As a general rule, Federal income tax must be assessed

within 3 years after a tax return is filed.    See sec. 6501(a).

That period may be extended, however, by written agreement

between the taxpayer and the Commissioner made before expiration

of the general 3-year period.    See sec. 6501(c)(4).

     The bar of limitations is an affirmative defense, and

taxpayers raising it must specifically plead it and carry the

burden of proof.    See Rules 39, 142; Adler v. Commissioner, 85

T.C. 535, 540-541 (1985).    A taxpayer can establish a prima facie

case by showing that the Commissioner mailed the notice of
                                  - 6 -

deficiency after the 3-year period of limitations.      Adler v.

Commissioner, supra at 540.      If the taxpayer establishes a prima

facie case, the burden of going forward shifts to the

Commissioner to show that the bar of the statute of limitations

is not applicable.     Id.   The Commissioner may meet this burden by

introducing a consent, valid on its face, that extends the period

of limitations to the date of the mailing of the notice of

deficiency.    See Concrete Engg. Co. v. Commissioner, 58 F.2d 566

(8th Cir. 1932), affg. 19 B.T.A. 212 (1930); Lefebvre v.

Commissioner, T.C. Memo. 1984-202, affd. 758 F.2d 1340 (9th Cir.

1985).   Once the Commissioner has established that the

limitations period was extended by way of the taxpayer’s consent,

the burden shifts back to the taxpayer to show affirmatively that

the consent is invalid.      See Adler v. Commissioner, supra; Ryan

v. Commissioner, T.C. Memo. 1991-49.      The burden of persuasion

never shifts from the taxpayer who has pleaded the statute of

limitations defense.    See Ryan v. Commissioner, supra; see also

Feldman v. Commissioner, 20 F.3d 1128, 1132 (11th Cir. 1994),

affg. T.C. Memo. 1993-17.

     The Greenfields signed Form 872-A on June 10, 1986, before

the expiration of the period of limitations on August 16, 1986,

and delivered that form to respondent.     Respondent was justified

in treating Form 872-A as an effective extension of the period of

limitations.
                                 - 7 -

B.   Period of Limitations

     Respondent argues that the notice of deficiency was timely

issued within the period stated in the Form 872-A executed by the

Greenfields.     As respondent sees it, that form allowed respondent

to assess the disputed amounts given the absence of a Form 872-T.

Petitioners argue that the Form 872-A signed by the Greenfields

extended the period of limitations only through November 18,

1992, which is 60 days after the filing of Mr. Greenfield’s

bankruptcy petition.2    To this end, petitioners assert, the Form

872-A is an executory contract and not, as asserted by

respondent, their unilateral waiver of the original

3-year period.

     By its terms, the Form 872-A signed by the Greenfields

extended the period of limitations to a date on or before the

90th day after:

     (a) the Internal Revenue Service office considering the
     case receives Form 872-T, Notice of Termination of
     Special Consent to Extend the Time to Assess Tax, from
     the taxpayer(s); or

     (b) the Internal Revenue Service mails Form 872-T to
     the taxpayer(s); or

     (c) the Internal Revenue Service mails a notice of
     deficiency for such period(s); except that if a notice
     of deficiency is sent to the taxpayer(s), the time for
     assessing the tax for the period(s) stated in the


     2
      Mr. Greenfield filed his bankruptcy petition on Sept. 19,
1992. Sixty days after this date is Nov. 18, 1992. While
petitioners assert erroneously in their brief that the 60th day
is Dec. 18, 1992, we understand them to be referring to Nov. 18,
1992.
                                - 8 -

     notice of deficiency will end 60 days after the period
     during which the making of an assessment was
     prohibited.

     In arguing that Form 872-A is an executory contract,

petitioners point to the “functional approach” adopted by the

Court of Appeals for the Eleventh Circuit, the court to which

this case is appealable.    Petitioners argue that this functional

approach deems an agreement to be executory even without

mutuality of remaining obligation between the contracting

parties, as long as the rejection of the agreement benefits the

estate and its creditors.   Concluding that the Form 872-A is an

executory contract, petitioners argue the period of limitations

was ended pursuant to 11 U.S.C. section 365(d)(1):     “In a case

under chapter 7 of this title, if the [bankruptcy] trustee does

not assume or reject an executory contract * * * of the debtor

within 60 days after the order for relief * * * then such

contract or lease is deemed rejected.”     Under this statute,

petitioners argue that the period of limitations extension for

Form 872-A expired before respondent issued the notice of

deficiency.

     Respondent argues petitioners’ position that Form 872-A is

an executory contract is misplaced.     Respondent argues that the

Supreme Court and this Court have held that consents to extend

the limitations period are not contracts but instead are a

unilateral waiver by the taxpayer.      See Stange v. United States,
                                - 9 -

282 U.S. 270, 276 (1931); Piarulle v. Commissioner, 80 T.C. 1035,

1042 (1983).    Petitioners do not disagree with respondent

concerning these holdings but urge this Court to step outside of

the holdings of Stange and Piarulle.    Petitioners argue that the

September 1981 version of Form 872-A signed by the Greenfields,

unlike the written agreement considered in Stange and the Form

872, Consent to Extend the Time to Assess Tax, considered in

Piarulle, also operates to extend the period of limitations on

refunds.    Petitioners argue that this refund extension creates a

mutuality that transforms Form 872-A from a unilateral waiver

into an executory contract.

     We decline petitioners’ invitation to hold differently here

than in Stange and Piarulle.    We are unpersuaded that the refund

language in the September 1981 version of Form 872-A effects a

fundamental change in the document, somehow transforming Form

872-A from a waiver into an executory contract.    This Court has

held consistently that, although interpretations of Forms 872-A

are informed by contract principles, Form 872-A is a unilateral

waiver of a defense and not a contract.    See Piarulle v.

Commissioner, supra at 1042; see also Bilski v. Commissioner,

T.C. Memo. 1994-55, affd. 69 F.3d 64 (5th Cir. 1995).    In Bilski,

which petitioners urge was decided wrongly, the facts were

similar to the facts here.    In 1986, the Bilskis executed a Form

872-A.     They filed for bankruptcy under chapter 7 in June 1988
                              - 10 -

and received their discharge in October of that year.

Approximately 1 year later, in October 1989, a notice of

deficiency was sent to the Bilskis for joint income tax liability

that the Bilskis claimed was discharged in bankruptcy and time

barred.   The Bilskis, as do petitioners, argued that the Form

872-A was an executory contract.   In affirming the Tax Court, the

Court of Appeals for the Fifth Circuit stated:

          Like every other circuit that has addressed the
     matter, we have held that “the [872-A] agreement to
     extend the statute of limitations between the
     Commissioner and the [taxpayer] is not a contract, but
     a unilateral waiver of a defense by the taxpayer.”
     Here, the Extension Agreement was an indefinite waiver
     of the statute of limitations. Although this is the
     first time that we have considered the nature of an
     872-A in the context of bankruptcy, upon reflection we
     can discern no reason to depart from the general rule
     or to carve out a bankruptcy exception to it.
     Accordingly, we hold that the Extension Agreement was
     not an executory contract that terminated automatically
     60 days after the Bilskis filed for bankruptcy.
     Rather, for purposes of bankruptcy, as for all other
     purposes, an 872-A is a waiver of the affirmative
     defense of time-bar under the statute of limitations.
     [Bilski v. Commissioner, 69 F.3d at 68 (quoting Buchine
     v. Commissioner, 20 F.3d 173, 179 (5th Cir. 1994),
     affg. T.C. Memo. 1992-36); fn. ref. omitted.]

     Applying the reasoning of Stange and Piarulle in the context

of bankruptcy, we find Bilski persuasive.   Petitioners have not

provided this Court with a convincing reason or case to the

contrary.   As set forth in the Form 872-A, taxpayers wishing to

terminate their extension of the limitations period under this

form should file a Form 872-T.   Only by filing a Form 872-T may a

taxpayer terminate the extension provided by a Form 872-A; no
                               - 11 -

other action taken by the taxpayer, written or oral, will operate

to terminate Form 872-A.    See Rev. Proc. 79-22, sec. 4.02, 1979-1

C.B. 563, 563; see also Grunwald v. Commissioner, 86 T.C. 85, 89

(1986).   Accordingly, we find and hold that respondent timely

issued the notice of deficiency to petitioners within the

applicable period of limitations provided by section 6501(a),

given that the Greenfields executed the Form 872-A extending the

limitations period and that the extension remained in effect when

respondent issued the notice of deficiency to them.

C.   Interest

     Petitioners argue that waiver of the period of limitations

in Form 872-A applies only to tax, which petitioners view as

exclusive of interest and penalties.    In making this argument,

petitioners rely on the literal language of Form 872-A, which, as

petitioners rightly point out, references Federal tax but neither

interest nor penalties.    Respondent argues that Form 872-A

constitutes a waiver that extends the period of limitations on

the assessment of tax, interest, penalties, and additions to tax.

     This Court has held that use of the term “tax” in Form 872-A

includes penalties and interest.    See Pleasanton Gravel Co. v.

Commissioner, 85 T.C. 839, 855 (1985) (citing Picard v.

Commissioner, 28 T.C. 955, 961 (1957)).    Neither respondent nor

the Greenfields in any way modified Form 872-A so as to except it

from the law construing the word “tax” on Form 872-A to include
                                - 12 -

interest and penalties.   Further, in Estate of Raney v.

Commissioner, T.C. Memo. 1992-684, a Form 872-A was deemed to

extend the period of limitations for increased interest under

section 6621.

     Petitioners cite Tolve v. Commissioner, 31 Fed. Appx. 73 (3d

Cir. 2002), as authority that the word “tax” does not include

interest or penalties.    In addition to the fact that Tolve is an

unpublished opinion that is not precedential, we find the facts

of Tolve distinguishable.   In Tolve the Form 872-A included typed

language limiting the amount of any deficiency assessment to that

resulting from six specific items, none of which referenced

additions to tax or interest.    Petitioners did not present to

this Court any modifications made to the Form 872-A that the

Greenfields signed.

D.   Equitable Estoppel

     Petitioners argue that respondent is equitably estopped from

arguing that the period of limitations has not expired.    In

support of this argument, petitioners point to respondent’s

failure to include the 1982 tax liability on his proofs of claim

and to Government correspondence addressed to the Greenfields.

     Equitable estoppel is a judicial doctrine that operates to

preclude a party from denying that party’s own acts or statements

that induce another to act to his or her detriment.    See McCorkle

v. Commissioner, 124 T.C. 56, 68 (2005).    It is to be applied
                              - 13 -

against the Commissioner only with the utmost caution and

restraint.   See id.; see also Hofstetter v. Commissioner, 98 T.C.

685, 700 (1992).   The necessary elements of equitable estoppel

are: (1) A false representation or wrongful misleading silence;

(2) an error in a statement of fact and not in an opinion or a

statement of law; (3) ignorance of the true facts by the person

claiming the benefits of estoppel; and (4) adverse consequences

to the person claiming estoppel by the acts or statements of the

person against whom estoppel is claimed.   See Estate of Emerson

v. Commissioner, 67 T.C. 612, 617-618 (1977).

     Equitable estoppel does not operate to preclude respondent’s

assertion of an open period of limitations because of the

bankruptcy proceeding.   The Greenfields’ tax liabilities for 1982

were not at issue in the bankruptcy proceeding.    Thus, the

bankruptcy court did not determine the Greenfields’ 1982 tax

liability.   Simply put, because the Greenfields’ 1982 tax

liability was never before the bankruptcy court, a claim cannot

lie for equitable estoppel.

     Neither does equitable estoppel operate to preclude

respondent’s assertion of an open period of limitations because

of Government correspondence to the Greenfields.    Petitioners

argue that the July 21, 2000, and the October 11, 2006, letters

support petitioners’ claim of equitable estoppel.    In the July

letter respondent stated:   “According to our records, there are
                               - 14 -

no other open liabilities on file for the above identification

numbers in the Manhattan District Office at this time” (a prior

statement references an outstanding Federal tax lien filed in

1995).    In the October letter respondent informed the Greenfields

that “The Statute of Limitations has already expired on the 1981,

1982, 1983, and 1984 tax years, so we can’t make an assessment”.

     The July letter did not contain a false representation or a

wrongful misleading silence concerning the period of limitations

for the 1982 year.   In fact, the July letter, in which respondent

advised the Greenfields that their only open Federal tax lien was

filed in 1995, is devoid of any statement concerning Form 872-A

or the period of limitations for 1982.   Without any such

statement, petitioners cannot claim to have been adversely

affected by reliance on that letter.

     In contrast the October letter clearly did contain a

statement regarding the period of limitations for 1982.     In that

letter, respondent stated that because the period of limitations

for 1982 had expired, no assessment could be made.   However, as

respondent points out, no adverse reliance could have occurred

because petitioners had instituted this case before the October

letter.   Adverse reliance cannot be said to exist on the basis of

a letter that was received after both the issuance of the notice

of deficiency and the filing of the petition.   See, e.g., Feldman

v. Commissioner, 20 F.3d 1128, 1134 (11th Cir. 1994) (taxpayers'
                             - 15 -

estoppel argument against enforcement of their extension of the

limitations period was rejected), affg. T.C. Memo. 1993-17.

     We have considered all arguments by petitioners for holdings

contrary to those which we reach herein.    To the extent not

discussed, we conclude that those arguments are irrelevant or

without merit.



                                           Decision will be entered

                                   under Rule 155.
