Announcement Relating to Court Decisions

It is the policy of the Internal Revenue Service to announce at an early date whether it will follow the holdings in certain cases. An Action on Decision is the document making such an announcement. An Action on Decision will be issued at the discretion of the Service only on unappealed issues decided adverse to the government. Generally, an Action on Decision is issued where its guidance would be helpful to Service personnel working with the same or similar issues. Unlike a Treasury Regulation or a Revenue Ruling, an Action on Decision is not an affirmative statement of Service position. It is not intended to serve as public guidance and may not cited as precedent.

Actions on Decisions shall be relied upon within the Service only as conclusions applying the law to the facts in the particular case at the time the Action on Decision was issued. Caution should be exercised in extending the recommendation of the Action on Decision to similar cases where the facts are different. More

• v e r, the recommendation in the A c t i o n on Decision may be superseded by new legislation, regulations, rulings, cases, or Actions on Decisions.

Prior to 1991, the Service published acquiescence or nonacquiescence only in

certain regular Tax Court opinions. T h e Service has expanded its acquiescence program to include other civil tax cases where guidance is determined to be helpful. Accordingly, the Service now may acquiesce or nonacquiesce in the holdings of memorandum Tax Court opinions, as well as those of the United States District Courts, Claims Court, and Circuit Courts of Appeal. Regardless of the court deciding the case, the recommendation of any Action on Decision will be published in the Internal Revenue Bulletin.

The recommendation in every A c t i o n on Decision will be summarized as acquiescence, acquiescence in result only, or nonacquiescence. Both “acquiescence” and “acquiescence in result only” mean that the Service accepts the holdong of the court in a case and that the Service will follow it in disposing of cases with the same controlling facts. However, “acquiescence” indicates neither approval nor disapproval of the reasons assigned by the court for its conclusions; whereas, “acquiscence in result only” indicates disagreement or concern with some or all of those reasons. Nonacquiscence signifies that, although no further review was sought, the Service does not agree with the holding of the court and, generally,

will not follow the decision in disposing of cases involving other taxpayers. In reference to an opinion of a circuit court of appeals, a nonacquiescence indicates that the Service will not follow the holding on a nationwide basis. However, the Service will recognize the precedential impact of the opinion on cases arising within the venue of the deciding circuit.

The announcements published in the weekly Internal Revenue Bulletins are consolidated semiannually and annually. The semiannual consolidation appears in the first Bulletin for July and in the Cumulative Bulletin for the first half of the y e a r, and the annual consolidation appears in the first Bulletin for the following January and in the Cumulative Bulletin for the last half of the year.

The Commissioner ACQUIESCES in the following decisions:

Sun Microsystems, Inc. v. Commis- sioner, T.C.M. 1995–69 ¹

Royal Caribbean Cruises, Ltd. v. United States, 108 F.3d 290 (11th Cir. 1997) ²

The Commissioner does NOTACQUIESCE in the following decision:

Trans City Life Insurance Company v. Commissioner, 106 T.C. 274 (1996) ³

1Acquiescence relating to whether the spread income realized from a disqualifying disposition of stock purchased through the taxpayer’s incentive stock option (“ISO”) plan constitutes wages under section 41(b)(2)(D) in determining whether certain qualified research expenses qualify for the credit for increasing research activities under section 41. 2Acquiescence relating to whether section 4471 of the Internal Revenue Code which imposes a one-time excise tax of $3 for each passenger who “embarks” or “disembarks” a commercial vessel in the United States, applies where the voyage begins and ends outside the United States, but make intermediate stops in the United States, where passengers temporarily leave the ship. 3Nonacquiescence relating to whether the Commissioner committed an abuse of discretion in determining that certain reinsurance agreements between unrelated parties had a “significant tax avoidance effect” within the meaning of Internal Revenue Code section 845(b).

November 3, 1997 4 1997–44 I.R.B.