                  T.C. Memo. 1999-146



                UNITED STATES TAX COURT



     SAN FRANCISCO WESCO POLYMERS, INC., Petitioner
    v. COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 7750-98.              Filed April 30, 1999.



     SF, a dissolved corporation, moved for partial summary
judgment on the ground that the period of limitations under
sec. 6501(a), I.R.C., had expired with respect to SF's
taxable year ended June 30, 1993. SF was liquidated on Dec.
31, 1994, and USA, a corporation, was formed to take over
SF's operations. USA's first corporate tax return was filed
for the taxable year ended June 30, 1994. R mailed a letter
with attached Forms 872, Consent to Extend the Time to
Assess Tax, on June 20, 1996 to C, SF and USA's president,
to extend the time to assess tax with regard to SF's taxable
year ended June 30, 1993. The letter stated that the
attached Forms 872 related to SF's taxable year ended June
30, 1993. The Forms 872 listed USA's name and employer
identification number but listed the taxable year ended June
30, 1993, as the period to be extended. C signed Form 872
in his capacity as president of USA. R mailed a notice of
deficiency on Feb. 3, 1998, more than 3 years after SF's tax
return for the year ended June 30, 1993 was filed.
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          Held: R has established by clear and convincing
     evidence that C signed Form 872 with the intent to extend
     the period of limitations for SF's taxable year ended June
     30, 1993.

          Held, further, Form 872 may be reformed to conform with
     the intent of the parties. Woods v. Commissioner, 92 T.C.
     776 (1989), applied.

          Held, further, R's notice of deficiency is not barred
     as untimely under the period of limitations on assessments
     contained in sec. 6501(a), I.R.C.



     Donald L. Feurzeig, for petitioner.

     Laurel M. Robinson, for respondent.



                          MEMORANDUM OPINION

     NIMS, Judge:    This matter is before the Court on

petitioner's motion for partial summary judgment under Rule 121.

Unless otherwise indicated, all section references are to

sections of the Internal Revenue Code in effect for the years in

issue, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

     Respondent determined the following deficiencies and

accuracy-related penalties with respect to the Federal income tax

of petitioner San Francisco Wesco Polymers, Inc. (SFWP) for the

taxable years ending June 30, 1993 and June 30, 1994:

                                                Penalties
         Year              Deficiency          Sec. 6662(a)
     June 30, 1993          $108,986              $6,150
     June 30, 1994            21,797               1,230
                               - 3 -



     The sole issue for decision is whether Form 872, Consent to

Extend the Time to Assess Tax, signed by a duly authorized

officer of SFWP's corporate successor in interest, constitutes a

binding agreement to extend the period of limitations under

section 6501(c)(4) with respect to SFWP's June 30, 1993 taxable

year.

     When the petition was filed, SFWP did not have a principal

place of business because it had previously ceased operations.

The IRS office to which SFWP's tax returns were made is located

in Fresno, California.   See sec. 7482(b)(1)(B).

                            Background

     The background facts related below are taken from the record

and the undisputed written representations of the respective

parties.

     SFWP mailed its Form 1120, U.S. Corporation Income Tax

Return, for the fiscal year ended June 30, 1993 (1993 return) to

the Fresno Service Center on February 2, 1994.     SFWP's 1993

return was signed by Miguel Chang (Chang), president and a

director of SFWP.   Respondent received SFWP's 1993 return on

February 4, 1994.   The general 3-year period of limitations for

assessment of tax expired on February 4, 1997.

     SFWP's Employer Identification Number (EIN) is XX-XXXXXXX.

The address for SFWP as set forth on its 1993 return was 555
                                - 4 -


Montgomery Street, Suite 816, San Francisco, California.    On

February 3, 1998, respondent mailed the notice of deficiency to

SFWP at 555 Montgomery Street, Suite 816, San Francisco,

California.

     U.S.A. Wesco Polymers, Inc. (USAWP), was incorporated under

the law of the State of California on August 20, 1993.    USAWP's

EIN is XX-XXXXXXX.    Chang was the president and chairman of

USAWP.    USAWP filed its first Form 1120 on February 10, 1995,

covering the fiscal year beginning September 1, 1993 and ending

June 30, 1994. USAWP's address on its Form 1120 was 555

Montgomery Street, Suite 816, San Francisco, California.

     On August 16, 1993, the shareholders of SFWP decided that

USAWP would take over SFWP's business operations on September 1,

1993.    SFWP liquidated on December 31, 1994.

     On June 20, 1996, respondent mailed a letter to Chang

attached to which were two copies of Form 872.    The letter stated

that the Form 872 was provided with respect to "the examination

of your corporate tax return, Form 1120, for San Francisco Wesco

Polymers, Inc." and requested that Chang execute Form 872 because

the period of limitations "will expire in February of 1997."

     The Form 872 mailed by respondent lists the name of the

taxpayer as: "USA Wesco Polymers, Inc., Successor in Interest to

San Francisco Wesco Polymers, Inc. (EIN XX-XXXXXXX)".    The EIN of

the taxpayer on Form 872 listed on the upper right corner is
                               - 5 -


USAWP's EIN.   Chang signed Form 872 as president under the

corporate name "U.S.A. Wesco Polymers, Inc., Successor in

Interest to San Francisco Wesco Polymers, Inc. (XX-XXXXXXX)".

The Form 872 purportedly extended the time to assess tax due on

the return ended June 30, 1993, to February 15, 1998.    Respondent

received the Form 872 from Chang on July 8, 1996.

     On May 15, 1997, respondent sent a letter to Kit Tam, a

representative of SFWP and requested additional consents to

extend the time to assess tax for both USAWP and SFWP.

     On May 29, 1997, SFWP's counsel sent a letter to respondent

stating that SFWP declined to sign any consents to extend the

time to assess tax with respect to Chang, SFWP and USAWP.

     The notice of deficiency for SFWP's taxable year ended June

30, 1993, was mailed on February 3, 1998, which is more than 3

years after SFWP filed its 1993 return.

                            Discussion

     The sole issue for decision is whether Form 872, Consent to

Extend the Time to Assess Tax, signed by a duly authorized

officer of USAWP, SFWP's successor in interest, constitutes a

binding agreement to extend the period of limitations under

section 6501(c)(4) with respect to SFWP's taxable year ended June

30, 1993.

     Summary judgment or partial summary judgment may be granted

if the pleadings and other materials demonstrate that no genuine
                               - 6 -


issue of material fact exists and that a decision may be rendered

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

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

Cir. 1994).   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.   See Dahlstrom v. Commissioner, 85

T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344

(1982).

     We are satisfied that no genuine issue of material fact

exists.   Partial summary adjudication is therefore appropriate in

this case.

     Since the deficiency notice was mailed more than 3 years

after the filing of the tax return for SFWP's taxable year ended

June 30, 1993, respondent is barred from assessing a deficiency

for that year unless an exception to section 6501(a) applies.

The pertinent exception in this case is found in section

6501(c)(4) which provides:

        (4) Extension by agreement.--Where, before the
expiration of the time prescribed in this section for the
assessment of any tax imposed by this title, * * * both the
     Secretary and the taxpayer have consented in writing to its
     assessment after such time, the tax may be assessed at any
     time prior to the expiration of the period agreed upon * * *
                                - 7 -


     Respondent asserts that Form 872 contained a mutual mistake,

allowing the Court to reform Form 872 to conform with the intent

of the parties.

     SFWP argues that it did not consent in writing to extend the

period of limitation on assessments.     Instead, SFWP contends that

respondent consented with USAWP to extend the period of

limitation on assessments as evidenced by the following facts:

(1) The taxpayer listed on Form 872 is identified as USAWP, (2)

the taxpayer's EIN on Form 872 is that of USAWP, and (3) the

corporate name on Form 872 is that of USAWP.

     For the reasons discussed below, we agree with respondent.

     The bar of the statutory period of limitation is an

affirmative defense, and the party raising this defense must

specifically plead it and prove it.     See Rules 39, 142(a);

Amesbury Apartments, Ltd. v. Commissioner, 95 T.C. 227, 240

(1990).    SFWP has pleaded the defense properly, but, as

previously stated, in a summary judgment proceeding factual

inferences are read in a manner most favorable to the opposing

party.    In this case, the undisputed facts, as discussed below,

clearly and convincingly establish that the reference to USAWP

rather than SFWP in the Form 872 was the result of a mutual

mistake of the parties, which is susceptible of appropriate

reformation to conform with the intent of the parties.
                                 - 8 -


       Where an agreement made pursuant to section 6501(c)(4) does

not conform with the actual agreement between the parties, we may

reform the writing to conform with intent of the parties if

established by clear and convincing evidence.    See Woods v.

Commissioner, 92 T.C. 776, 789 (1989).    In Woods v. Commissioner,

the taxpayers executed a Form 872, Consent to Extend the Time to

Assess Tax, for the taxable year ended 1978.    The Form 872

extension was limited to adjustments relating to the taxpayers' S

corporation, "Solar Equipment, Inc.", identified by the proper

EIN.

       Subsequently, the Commissioner sent a letter to the

taxpayers asking them to execute a Form 872-A, Special Consent to

Extend the Time to Assess Tax.    The letter erroneously referred

to "Solar Environments, Inc."    The Form 872-A accompanying the

letter also erroneously referred to "Solar Environments, Inc."

and the wrong taxable year.    The Commissioner discovered the

error as to the year and sent another Form 872-A.    However, this

form also contained an erroneous reference to "Solar

Environments, Inc."    We found that at the time each extension was

executed, both the taxpayers and the Commissioner intended that

the extensions would allow the Commissioner additional time to

complete his examination of the taxpayers' 1978 tax return.

       Accordingly, in Woods v. Commissioner, supra at 789, we held

that reformation of the Form 872-A to conform to the parties'
                                - 9 -


intent was proper, finding the evidence clear and convincing to

support such action.   The evidence consisted of the facts that

"Solar Equipment, Inc. EIN: XX-XXXXXXX" was the only subject

under examination and the only issue still open under a prior

written extension.

     In this case, we assume that Chang read and understood

respondent's June 20, 1996, letter stating that the attached

Forms 872 related to examination of SFWP's corporate tax return.

Although the Forms 872 listed USAWP's name and EIN, it listed the

taxable year ended June 30, 1993, as the period to be extended.

USAWP filed its first corporate tax return on February 10, 1995,

covering the fiscal year beginning September 1, 1993, and ending

June 30, 1994.   Since USAWP's first filed tax return was for the

period ended June 30, 1994, the Form 872's reference to the tax

return ended June 30, 1993, must have referred to SFWP, not

USAWP.   Since Chang was the president of both SFWP and USAWP, we

infer that he knew this fact.   Therefore, we conclude that Chang

signed the Form 872 with the intent to extend the period of

limitations for SFWP's taxable year ended June 30, 1993.   The

evidence clearly and convincingly supports reformation.    See also

Buchine v. Commissioner, 20 F.3d 173 (5th Cir. 1994), affg. T.C.

Memo. 1992-36.

     SFWP argues that Woods v. Commissioner, supra, does not

authorize reformation where both parties to a reformation have
                               - 10 -


not signed the Form 872, citing Malone & Hyde, Inc. v.

Commissioner, T.C. Memo. 1992-661, for support.    But petitioner’s

reliance on the latter case is nullified by the fact that Chang,

who did sign the Form 872, was president of both corporations

and, as we have demonstrated, was well aware that only SFWP's

taxable year could have been intended.

     SFWP further argues that the Form 872 is invalid because

Chang did not have the authority to sign the Form 872 on behalf

of SFWP.   Authority to act on behalf of a corporation in tax

matters is determined by State law.     Sanderling, Inc. v.

Commissioner 66 T.C. 743, 750 (1976), affd. in part and revd. in

part 571 F.2d 179 (3d Cir. 1978).   Since SFWP was a California

corporation, we determine the scope of an agent's authority under

California law.

     Under California law, a corporation that has dissolved may

still carry out acts necessary to wind up its affairs, including

those relating to taxes.   See Cal. Corp. Code sec. 2010(a) (West

1990); Callan v. Commissioner, 476 F.2d 509 (9th Cir. 1973),

affg. per curiam 54 T.C. 1514 (1970).    California Corporations

Code section 2001 (West 1990) provides in pertinent part:

        The powers and duties of the directors * * * and officers
     after commencement of a dissolution proceeding include, but
     are not limited to, the following acts in the name and on
     behalf of the corporation:

           *       *       *        *        *       *        *
                               - 11 -


        (b) To continue the conduct of the business insofar as
     necessary for the disposal or winding up thereof.

        (c) To carry out contracts and collect, pay, compromise
     and settle debts and claims for or against the corporation.

          *       *        *       *       *       *         *

        (h) In general, to make contracts and to do any and all
     things in the name of the corporation which may be proper or
     convenient for the purposes of winding up, settling and
     liquidating the affairs of the corporation.

     Thus, under California law, Chang, as president and director

of SFWP, had the authority to execute agreements which extended

the period of limitations with respect to SFWP's taxable year

ending June 30, 1993.   See McPherson v. Commissioner, 54 F.2d 751

(9th Cir. 1932) (holding that agreements to extend the period of

limitation on assessments signed by trustees of a dissolved

California corporation were valid), affg. Crosman v.

Commissioner, 22 B.T.A. 390 (1931); Praxiteles, Inc. v.

Commissioner, T.C. Memo. 1993-622 (holding that the president of

a dissolved S corporation had the authority to execute agreements

to extend the period of limitations with respect to a taxable

year of the S corporation under California law), affd. without

published opinion 70 F.3d 1279 (9th Cir. 1995).

     Moreover, Malone & Hyde, Inc. v. Commissioner, supra, lends

no support to SFWP's position.   In Malone & Hyde, Inc. v.

Commissioner, supra, an accountant, under a power of attorney,

signed Forms 872 on behalf of Malone & Hyde, Inc., which, at the
                              - 12 -


time the consents were executed, had already been merged into

another company.   At no time was the accountant an officer,

director, or shareholder of Malone & Hyde, Inc.    The parties

agreed that Delaware law applied.    We held that the consents

executed by the accountant were invalid because, under Delaware

law, his power of attorney ceased when Malone & Hyde, Inc. ceased

to exist after the merger.

     Unlike Malone & Hyde, Inc., Chang was an officer and

director of SFWP, giving him authority to sign Form 872 under

California law; he was not a third-party agent exercising

authority under an extinguished power of attorney.

     Accordingly, we hold that respondent has established by

clear and convincing evidence that SFWP intended to extend the

period of limitations for its taxable year ended June 30, 1993,

and that Form 872 may be reformed to conform with the intent of

the parties.   See Woods v. Commissioner, 92 T.C. 776 (1989).

Therefore, respondent's notice of deficiency is not barred as

untimely under the period of limitations on assessments under

section 6501(a).

     To reflect the foregoing,

                                      An appropriate order

                                 will be issued.
