HALL et al v. USA, No. 1:2013cv00003 - Document 21 (Fed. Cl. 2013)
Court Description: PUBLISHED OPINION and ORDER (reissuance of opinion and order filed on July 12, 2013 for publication). Signed by Sr. Judge Bohdan A. Futey. (dls) Copy to parties.
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HALL et al v. USA Doc. 21 ORIGINAL Xtrfrlt 0Hxfe! 9rbi&:B @onrt of felerst 6,bfmg FILED No. 13-37 JUL 31 (Filed July 31,2013)* U.S, COURTOF * rt * * * * * * * * * * * tr * * * * ,r ,r * * * tr tr * * RALEIGH W. HALL & MARGAR"ET HALL., PRO SE E. FEDERALCN-AII#I * :r Plaintiffs, THE UNITED STATES, Defendant. 2013 t' Tax Refund; Net Operating Losses; 26 U.S.C. $ 172; Mitigation Provisions of 26 U.S.C. $$ r3ll-l3ls; Circumstance of Adjustment, 26 U.S.C. s l3l2 * * * * * * * * * * * * * * * * * * * * * ,. * * ,r * * Raleigh W Hall and Margaret E. Hall, pro se, Jamaica, New York. David Raymond House, Department of Justice, with whom was David L Pincus, Mary A. Abate and Assistant Attomey General Kathryn M. Keneally, for Defendant. OPINION & ORDER Futey, Jadee. This case is before the Court on defendant's motion to dismiss for lack of subject matter jurisdiction, filed March 20,2013. Plaintiffs responded on May 15, 2013 with a cross-motion for summary judgment, and defendant responded on June 6, 2013. Plaintiffs filed their reply on July 8, 2013. Defendant's motion seeks dismissal of plaintiffs' complaint on statute of limitations grounds, and plaintiffs seek summary judgment in their favor. This case is a pro se ta,\ case, directly related to Hall v. Llnited States,99 Fed. Cl. 617 (2011), in which plaintiffs filed amended retums and sought to apply several years ofnet operating losses ("NOLs")' forward en masse to their taxable income in 2003. Arguing that taxpayers must follow the precise rules of the Internal Revcnue Code's ('I.R.C.) S 172 (2012) when deducting NOLs by *This case was originally filed July 12, 2013 and reissued this date for publication at the request ofthe Governmenl. I Net operating losses are generally defined by the Code as the excess of deductions over gross income. LR.C. 6 172. Dockets.Justia.com applying such losses first as a carryback unless a timely waiver is elected, the Govemment moved for summary judgment. Hall,99 Fed. Cl. at 619-20. The Court granted the Govemment's motion on August 9,2011, entering judgment on the same day, and dismissing the complaint. Id. at 622. Plaintiffs filed new claims for refunds for taxable years 1992, 1995, and 1997 on October 7 ,2011, and when those were denied, brought this complaint on January 2,2013. Compl. 3. Plaintiffs maintain that they are entitled to refunds by invoking sections 131l-1314 of the Internal Revenue Code, which under certain circumstances lift the bar of the statute of limitations on either an assessment by the Commissioner, or a claim for refund to the taxoaver. Id, I. Background Mr. Raleigh Hall and wife, Margaret Hall are individual taxpayers and sole shareholders of R.W. Hall General Contractors, Inc., an S corporationz organized under the laws ofNew York. Compl. l. In Hall v. United States,99 Fed. Cl. 617 (2011), plaintiffs soughr to apply several years of accumulated NOLs forward to taxable year 2003. They had suffered losses in taxable years 1988, 1989, 1990, 1991, 1996, and 2001, and reported taxable income in 1992, 1993,1995, 1997,1998,2000, and 2003. Hall, 99 Fed. Cl. at 619. In April 2007, they filed amended tax retums for 1988, 1989, 1990, 1991, 1993, 1996, and 2001, and sought ro reduce their 2003 taxable income by applying 9721,344 in NOLs generated since 1988 directly toward 2003 taxable income, resulting in a refund. Id The IRS denied the claim on March 19, 2010, and plaintiffs filed suit in this Court on May 11, 2010. Id. In its opinion on the Govemment's motion for summary judgment, the Court discussed the NOL deduction, and the Code's mandatory operation of NOL carrybacks and cnrryovers, which requires an NOL to be carried back first to each of the two taxable years preceding the year ofthe loss, and only then as a carryover to each of the twenty taxable years following the year of the loss. Id. at 620 (citing I.R.C. $ 172(bXlXA)). The NOL must be carried back to the earliest taxable year possible, and any remaining portion not absorbed by the income in that year may be carried forward. Id. at 620-21 (citing LR.C. g 172(bX2)). The Courr also noted that the Code provides a taxpayer with the option to waive_the carryback period, and rather apply NOLs forward to subsequent yrurs.3 Id. at 621 (citing 2 An S Corporation is a small business corporation for which an election has been made under section 1362(a) for the taxable year. I.R.C. g l36l(a)(l). ' For example, ifa taxpayer sustained a NOL in 1995, the amount would first be carried back and applied to the earliest year possible, 1993. If after applying the NOL to taxable income for that year any portion remained unabsorbed, this would next be applied to 1994. Any leftover amount could then be applied each year forward, for up to twenty years, starting with taxable year 1996. If the taxpayer in this example elected to waive the carryback period - which the taxpayer would have to do by April 15, 1996 , the NOL would frrst be applied to taxable year 1996. LR.C. 172. $ $ 172(bX3)). A taxpayer must affirmatively elect to take this waiver, which "shall be made by the due date (including extensions of time) for filing the taxpayer's retum for the taxable year of the net operating loss for which the election is to be in effect." Id. (citing $ 172(bX3)). Once elected, the waiver is inevocable. 1d The Court found that the rules for allocating NOLs must be strictly followed, and since plaintiffs did not timely elect to waive the carryback periods for the NOLs they suffered from 1988 to 2001, they could not retroactively do so. /d Rather, any waiver was required to have been made "by the due date" of each relevant taxable year. 1d Finally, the Court dismissed plaintiffs' argument that $ 172 discriminates in favor of large, wealthier taxpayers, and that waivers generally should not be required. Id. at622. Plaintiffs' current complaint seeks refunds for tax years 1992, 1995, ar;rd, 1997,for a total of$237,813. Compl. 1. The Halls assert that they paid $808,942 in taxes for those years, through a combination of payroll withholdings and payments made with respective retums, and the Intemal Revenue Service ("IRS") wrongfully denied their claims for refunds. 1d at 2. Plaintiffs state that claims for refund were frled with the Intemal Revenue Service Center on October 7.2011. Id. at 3. The IRS notices of disallowance state the claims were received October 14,2011. Compl. Ex. B. For taxable year 1992, plaintiffs filed their original retum on August 16, 1993 and made a subsequent payment on October 4, 1993. Def.'s Ex. 1. Plaintiffs sought to amend their retum to carry over NOLs from 1988, 1989, 1990, and 1991. Compl. Ex. A. For taxable year 1995, plaintiffs filed their retum October 21, 1996 and made a subsequent payment January 23, 1997, Def.'s Ex. 2. Plaintiffs sought to carry over NOLs from 1992 and 1993, and carry back NOLs from 1996. Compl. Ex. A. For taxable year 1997 , plaintiffs filed their retum on April 15, 1998 with a payment. Plaintiffs sought to apply a carryback loss from 2001. Compl. Ex. A. The IRS denied all of plaintiffs' claims in formal letters dated November 11,2011. Compl. Ex. B. Their appeals were also denied, in letters dated December 1,2012. Compl. Ex. C. In the current case, plaintiffs claim they are entitled refunds based on $ 172 of the Internal Revenue Code, pursuant to a decision having been rendered by this Court in Hall v. United States,99 Fed. Cl. 617 (2011), and that'lhese claims were filed under Secrions 1311. 1312. l3l3 & 1314 of the Intemal Revenue Code." Comol. 3. II. Discussion Defendant seeks to dismiss the complaint for lack ofjurisdiction pursuant to RCFC l2(bxl). A pro se complaint is to be liberally construed, and plaintiffs' filings "must be held to 'less stringent standards than formal pleadings drafted by lawyers[.]"' Estelle v. Gamble, 429 U.S. 97, 106 (1976) (quoting Haines v. Kerner,404 U,S. 519, 520-21 (1972)); Durr v. Nicholson,400 F.3d 1375, 1380 (Fed. Cir. 2005). While leniency will be extended, pro se plaintiffs are not entitled to relaxation vis-ir-vis the jurisdiction requirement. See Kelley v. Sec'y, U.S. Dep't of Labor,812 F.2d 1378, 1380 (Fed. Cir. 1987) ("[L]eniency with respect to mere formalities should be extended to a pro se party . . . [however] a court may not similarly take a liberal view of th[e] jurisdictional requirement and set a different rule for pro se litigants only."); Demes v. United States, 52 Fed. Cl. 365,372 n.9 (2002) ("pro re status does not relieve plaintiffs of their jurisdictional burden"). Before proceeding to the merits, a court must satisfy itself that it has jurisdiction over a matter. PIN/NIP, Inc. v. Platte Chem. Co., 304 F.3d 1235, 1241 (Fed. Cir. 2002). Once the court's subject matter jurisdiction is put into question, it is "incumbent upon [the plaintiff] to come forward with evidence establishing the court's jurisdiction . . . by a preponderance of the evidence." Reynolds v. Army and Air Force Exch. Serv.,846 F.2d 746,748 (Fed. Cir. 1988). Because it is a sovereign, the United States is only subject to suit to the extent it has consented to be sued. See United States v Testan,424 U.S. 392.399 (1976). Congress has provided such consent with regard to refund of federal tax payments. 28 U.S.C. g l3a6(a)(l) (2012); Nasharr v. United States, 105 Fed. Cl. I14, I l8 (2012). Accordingly, the Court of Federal Claims and the district couts have original, concurrent jurisdiction with respect to "[a]ny civil action against the United States for the recovery ofany internal-revenue tax alleged to have been erroneously or illegally assessed or under the intemal-revenue laws[.]" 28 U.S.C. $ l3a6(a)(l); Roberts v. United States,242 F.3d 1065, 1067 (Fed. Cir. 2001). collected This waiver of sovereign immunity is construed narrowly in the context of tax refund suits, and 'Jurisdiction of the Court of Federal Claims is limited by the Internal Revenue Code, including 26 U.S.C. g 7422.- Waltner v. United States, 679 F.3d 1329, 1332 (Fed. Cir. 2012).The court's jurisdiction is rhus subject to the administrative refund scheme that Congress established in the Code. See United States v. Clinrwood Elkhorn Min. Co., 553 U.S. 1, 4 (2008) ("The Intemal Revenue Code specifies that before [bringing an action for a tax refund], the taxpayer must comply with the tax ref'und scheme established in the Code.") (citing United States v. Dalm, 494 U.S. 596, 609-10 (1990). This includes compliance with the statutorily prescribed timing requirement for filing a refund claim. Dalm,494 U.S. at 609-10; McAdams v. United States. 07 -164T.2008 WL 65427 1. at *2 (Fed. Cl. Feb. 1. 2008). Section 7 422(a) of the Intemal Revenue Code states: [n]o suit or proceeding shall be maintained in any court for the recovery of [1] any intemal revenue tax alleged to have been enoneously or illegally assessed or collected, or [2] of any penalty claimed to have been collected without authority, or [3] of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with [the IRS]. I.R.C. $ 7 422(a). Thus to maintain jurisdiction, a party seeking to recover any intemal-revenue tax, penalty, or sum from the United States must timely pursue and exhaust its administrative remedies pursuant to the IRS's regulations prior to filing a complaint in federal coutt. Strategic Hous. Fin. Corp. of Travis Cnty. v. United States,608 F.3d 1317 , 1324 (Fed. Cir. 2010). A. Plaintiffs' Claims Are Barred by the Statute of Limitations "Statutes of limitations are an indispensable element of practical tax administration, and both hardships to taxpayers and losses of revenue may and do result from their application in the field of taxation." Olin Mathieson Chem. Corp. v. United Stqtes,265 F.2d 293,296 (7th Cir. 1959). The purpose of a statute of limitations is to protect against stale claims, United States v. Memphis Cotton Oil Co.,288 U.S. 62, 7l (1933), and the limitations provisions of the Code "introduce . . . finality principles that horizontally limit, to a prescribed set of years, the ability of taxpayers and govemment alike to modifr the computation of income." Schortmann v. United States,92 Fed. Cl. 154, 155 (2010). The typical statute of limitations for filing a tax refund claim is three years from the time the retum was filed or two years from the time the tax was paid, whichever of such periods expires the later. I.R.C. $ 65 1 I (a). Where a taxpayer does not file a refund claim within the period defined in $ 6511(a), the court must find that it lacks jurisdiction. Clintwood,553 U.S. at 8-9. In the context of net operating loss or capital loss carrybacks, however, Congress enacted a special provision, $ 6511(dX2XA), stating that the claim for refund must be filed within three years of the date on which the retum was due to be filed (including extensions) "for the taxable year of the net operating loss . . . which results in such carryback[.]" I.R.C. $ 651l(dX2XA] Electrolux Holdings, Inc. v. United States, 491 F .3d 1327, 1329-30 (Fed. Cir. 2007); Glenwood Cooperative, Inc. v. United States,32 Fed. Cl. 568, 571 (1995) ("[The statutory referencej refers to . . . when the loss was actually incurred, not to some later or earlier tax year to which the loss might be carried forward or back;'), aff'd, 73 F.3d 344,345 (Fed. Cir. 1996). In their request for a refund for the most recent year, 1997, plaintiffs seek to carryback NOLs incuned in 2001. Pursuant to g 651 l(dX2)(A), a claim for refund for these NOLs must be filed within three years of the date on which the retum was due to be filed for the taxable year of the NOL. As plaintiffs' tax retum for 2001 was due April 15, 2002,q the Government is correct that the claim for refund must have been filed by April 15, 2005. Plaintiffs filed their claims on October 7, 2011 - over six years past the applicable statute of limitations. Similarly, for the 1996 carryback to be applied to 1995 - three years from the return due date of April 15, 1997 - would place the closing of the limitations period at April 15, 2000. For claims seeking to carry over NOLs from 1992 and 1993 to the 1995 taxable year, the general time constraints of $ 6511(a) apply, requiring refund claims within three years of the filing of the retum - in plaintiffs' case, by October 2l , 1999. Likewise, the loss carryovers plaintiffs seek to apply to taxable year 1992 require the claims to have been made by August 16, 1996 three years from the date plaintiffs filed their 1992 tax retum. The October 2011 claims for refund fall far outside the statutory limits permitted by the Code, and deprive this Court ofjurisdiction. See Dalm,494 U.S. at 609-10. Such periods are established to cut off rights, justifiable or not, t}rat might otherwise be asserted and they must be strictly adhered to by the judiciary. See Rosenmqn v. United States, 323 IJ.S. 658, 661 (1945). "Remedies for resulting inequities are to be provided by Congress, not the courts." Kavanagh v. Noble,332 U.S. 535, 539 (1947). B. No Circumstance of Adjustment Exists to Implicate the Mitieation Provisions In their complaint and motion for summary judgment, plaintiffs suggest that their claims for refunds were filed under I.R.C. $g 1311, 1312, 1313, and 1314, which mitigate operation of the statute of limitations. pl.'s Mot. for Summ. J. 2. Sections 131 1-1315 are commonly refened to as the ..mitigation sections" and when applicable, work to reopen a taxable year closed by the statute of limitations. See Benenson v. Ilnited States,3B5 F.2d 26,29-30 (2d Cir. 1967); Glatt v. United States,470 F.2d 596, 598 (Ct. Cl. 1972). ln specified circumstances, the mitigation provisions provide "certain rules for the correction of the effect ofan enoneous treatment ofan item in a taxable year which is closed by the statute of limitations . . . in cases where . . . it has been determined that tlere was an eroneous treatment of such item in the closed year.,' Treas. Reg. $ 1.1311(a)-1. For example, "if the taxpayer claims that a deduction should be allowed for a particular year and it is ultimately determined that the deduction was not allowable in that year, then the trxpayer may take the deduction in the proper year if that year was not closed at the time the taxpayer first claimed a deduction'" 1d. The statute aims to "produce the effect of attributing income or a "[R]etums made on the basis of the calendar year shall be filed on or before the following the close ofthe calendar year , . . ." LRC. $ 6072. l 5m day of April deductions to the right year and the right taxpayer" and when a determination demonstrates a prior inconsistent position was enoneous, the disputed item upon the prior year's tax is recomputed to ascertain the amount of the adjustment, to produce the same result as if the enor had never been committed. Note,,Sectiozrs I311-15 of lhe Internal Revenue Code: Some Problems in Administration, 72 Harv. L. Rev. 1536, 1538 (1959) (quoting S. Rep. No. 75-1567, at 50 (1938). "While these mitigation provisions are remedial and should be given a liberal interpretation, the party invoking them has the burden of showing that mitigation is permitted." Elmes v. Comm'r & United States Virgin Islands,20ll106,2012 WL 4462658, at *6 (D.V.l. SepL 27,2012) (citing Koss v. United States,.69 F.3d 705, 709 (3d Cir. 2005)); Longiotti v. United States, 819 F.2d 65, 68 (4'n Cir. l9S7) ("[The mitigation provisions] do not [] constirute general equitable exceptions to statutory limitations periods, and the party seeking to invoke them bears the burden of demonstrating that their requirements have been satisfied."). The statute also does "not purport to relieve against all inequities occasioned by the statute of limitations[,]" United States v. Rushlight,2gl F.Zd 508, 5 l4 (9th Cir. l96l ), and its provisions must be strictly construed. Schwqrtz v. United States,67 F.3d 838, 840 (9'n Cir. 1995); Comm'r v. Estate of Goldstein, 340F.2d24,27 (2d Cir. 1965). In order for the mitigation provisions to apply, plaintiffs must meet three threshold requirements: (l) there must be "a determination" as defined by I.R.C. $ 1313(a)(1)-(a); (2) the determination must fall within one of the ,,circumsrances of adjustment" described in 26 U.S.C. g l3l2(1)-(7); and (3) depending on which circumstance of adjustment is found, either an inconsistent position must have been maintained by the party against whom the mitigation will operate, 26 U.S.C. $ 13 1 1(bX1), or the correction of the error must not have been baned at the time the party for whom mitigation will operate first maintained its position,26 U.S.C. $ 13ll(bx2). I.R.C. g 1311(a);Haasv. (lnitedStates, t07Fed. Cl.t,6(2012); Lastv. UnitedStates,3TFed. Cl. 1,7-8 (1996)(citingLongiotti,Blg F.2dat68). A "determination" is defined as "a decision by the Tax Court or a judgment, decree, or other order by any court of competent jurisdiction, which has become final." I.R.C. g l3l3(a)(1); Olin Mathieson Chem. Corp.,265 F.2d at297 (district cow's final judgment that taxpayer's loss was a long term capital loss was a "determination" for mitigation provisions). Here, plaintiffs maintain the decision of this Court in Hall,99 Fed. Cl. 617, is such a determination. Final judgments of courts sitting in competent jurisdiction fit the definition of "determination." ln Hall, jurisdiction was proper pursuant to g 1346(a)(l). Therefore. plaintiffs meet this requirement. For the second requirement, plaintiffs cite two circumstances of adjustment in their case, first g 1312(6), and later g 1312(3XA). Compl. 2-3; pl.'s Mot for Summ. J. 2. Section 1312(6) authorizes the circumstances of adiustment provided in g 1311 for: (6) Conelative deductions and credits lbr certain related corporalions.--The determination allows or disallows a deduction (including a credit) in computing the taxable income (or, as the case may be, net income, norrnal tax net income, or surtax net income) of a corporation, and a conelative deduction or credit has been erroneously allowed, omitted, or disallowed, as the case may be, in respect of a related taxpayer described in section l3 13(c)(7). 1312(6). In their subsequent pleadings.s plaintiffs suggest that 12(3XA) should apply to their case as well, which provides a circumstaace of $ adjustment for "[d]ouble exclusion of an item of gross income" in which the determination "requires the exclusion from gross income of an item which was enoneously excluded or omitted from the gross income of the tarpayer for another taxable year, or from the gross income of a related taxpayer[.]" I.R.C. $ l3l2(3XA). Neither of these is applicable to plainriffs' situation, and they do not accurately characterize the Court's determination in Hall,99 Fed. Cl. 617, which disallowed a deduction due to plaintiffs' failure to follow the Drecise rules I.R.C. $ I3 of$ 172. - Plaintiffs argue that the IRS's and later this Court,s determination disallowing their NOL deductions "required the exclusion from gross income [ofl these same losses, which, by the emor of omission, were already excluded from [plaintiffs'j tax retums therefore a double exclusion." Pl.'s Resp. to Def.,s Reply 2. ECF No. 17. Simply put, plaintiff's are alleging that the NOLs themselves were the excluded item, Id. at 3. The language of the Code does not support this result. Gross income is "all income from whatever source derived" and the illustrative list that follows includes only items that add wealth, not negative elements such as deductions. Sea I.R.C. $ 6l(a); compare Schwqrtz,6T F.3d at" 840 (plaintiffs could not avail themselves of mitigation provisions because their ordinary loss was not "an item enoneously included in gross income .,'), Gardiner v. United States,536F.2d 903, 906 (10,n Cir. 1976) (.,The meaning of an item of gross income . . . is restricted to positive items and does not include negative elements such as deductions [] the omission of which results in increased taxes.,,) - - 5 The Government submits thal the doctrine of variance prohibits plaintiffs fiom changing the circumstance of adjusrment relied upon fiom g 1312(6) to $ l3lr(3xA), because it wai not originally raised in the claims for refund. Dei's Resp. to pl.'s Mot. for summ. J. 4-5. Assertine that the "factual bases and legal theories as between the two are vastly different" this change provisions would take away the IRS's notice as to the claim and specific facts upon which it is predicated. /d at 5. Because the courl has decided to grant defendant's motion on other grounds, it declines to explore whether the IRS was not sufficiently apprised to respond to a different circumstance of adjustment in s 1312 such that the doctrine of variance would bar olaintiffs' ii arsument. (emphasis in original), and Milburn v. United States,947 F. Supp. 1015, 1020 (W.D. Tex. 1996) (agreeing with defendant that "[i]n the absence of a special definition of gross income under the mitigation provisions . . . [p]laintiffs' failure to include a deduction for interest paid . . . although aft'ecting gross income, is not al ilem of gross income." (emphasis in original), v,ith Kqppel's Estote v. Comm'r,615 F.2d 91, 93-97 (3d Cir. 1980) (cash surrender value of annuity policies is an item to be included in gross income). Therefore plaintiffs' case does not fall under the circumstance of adj ustment in $ l3l2(3)(A). Nor does it implicate correlative deductions for related corporations, which plaintiffs earlier ,l312(6). suggested under $ ) Construing the pleadings in the light most favorable to plaintiffs, the only circumstance of adjustment that could possibly apply to their situation would be $ 1312(4), which refers to double disallowance of a deduction or credit.o Section 13 12(4) permits a circumstance of adjustment in a situation where "[t]he determination disallows a deduction or credit which should have been allowed to, but was not allowed to, the taxpayer for another taxable year, or to a related taxpayer." I.R.C. $ 1312(4); Treas. Reg. g 1.1312-4(a); Last,37 Fed. Cl. at 8. In essence, plaintiffs' argument would be that the decision of the Court to disallow their deduction of the combined NOLs in 2003 was a "determination which disallowed a deduction which should have been allowed to, but was not allowed to, the taxpayer for another taxable year." See Kuehn v. United States, 480 F.2d 1319, 1322 (Ct. Cl. 1973). This position would contend rhat because the deduction was disallowed in 2003, it should have been allowed for earlier years, and that section 1312(4) allows an adjustment to be made to the prior years even though closed at the time the 2003 deduction was disallowed. 1d This mitigation of the statute of limitations - for a taxpayer who does not act to claim his NOLs is not the double tax situation that the mitigation provisions aim to resolve. See Longiotti v. United States,635 F. Supp. 840,842 (M.D.N.C. 1986) (,,While the bar of the statute of limitations is harsh, the court cannot conclude that the inability to carry back the NOLs operates as a double tax to engage the mitigation provisions."), aff'd, Longiotti,8l9 F.2d at 65. Therefore plaintiffs fail to establish the second requirement of a circumstance of adjustment under $ 13 12. - Plaintiffs also do not meet the third requirement set out in $ 13 I 1(bX2XB). As the Govemment submits, when the circumstance of adjustment is described by section 1312(4), section l31l(b)(2)(B) requires that, at the time the taxpayer first maintains to the Service, in writing, that he is entitled to the deduction that is ultimately denied, the deduction not be baned for the proper year. LR.C. $ l3l1(b)(2xB); see Esterbrook Pen Co. v. {Jnited States, 6 o The existence of a separate provision devoted to double disallowed deductions funber supports lhe Court's conclusion supra that plaintiffs' NOLS cannot be classified as exclusions to gross income. See Kappel's Estate, 615 F.2d at 97 (',Reading the several interrelated provisionJ. . . gives to each an independent significance which is entirely consistent with the policies of mitigation provisions."). q A.F.T.R.2d 5123 (D.N.J. 1960) C'[$ 1311(bX2XB)] is satisfied because plaintiff had originally maintained on its 1952 retum that it was entitled to the deductions in issue for that year, at which time a refund for 1953 was not barred."). Section 1.13 I I (bX2Xb) of the regulations provides in relevant part, that the taxpayer will be considered to have first maintained in writing before the Commissioner or the Tax Court that he was entitled to such deduction or credit when he first formally asserts his right to such deduction or credit as, for example, in a retum. Treas. Reg. $ l.l31l(b)-2. Here, plaintiffs first maintained their position - that they were entitled to the aggegated NOLs - through a claim for refund in their 2003 retum filed in April 2007, prior to this Court's consideration in Hall,99 Fed. Cl. 617. As ofthat date, refunds for taxable yearc 1992, 1995, and 1997 were already time-barred. Plaintiffs therefore have not met all three requirements of the mitigation provisions, and are not eligible to reopen the statute of limitations. See r.R.c. $ r31r(bx2xB). IIl. Conclusion For these reasons, defendant's motion to dismiss is GRANTED, and plaintiffs' motion for summary judgment is DENIED. The Clerk is directed to dismiss the complaint with prejudice. No costs. IT IS SO ORDERED. BOHDAN A. F l0
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