Actions 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 be 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. Moreover, the recommendation in the Action on Decision may be superseded by new legislation, regulations, rulings, cases, or Actions on Decisions.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. The 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 Action 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 holding 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, “acquiescence in result only” indicates disagreement or concern with some or all of those reasons. Nonacquiescence 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 year, 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:

Internal Revenue Service v. Wald- schmidt (In re Bradley), ¹

(M.D. Tenn. 1999)

Estate of Mellinger v. Commis- sioner, ² 112 T.C. 4 (1999)

Hospital Corp. of America and Sub- sidiaries v. Commissioner, ³

109 T.C. 21 (1997)

Boyd Gaming Corporation v. Com- missioner, ⁴

F.3d (9th Cir. 1999)

The Commissioner NONACQUIESCES in the following decisions:

Vulcan Materials Company and Sub- sidiaries v. Commissioner, ⁵

96 T.C. 410 (1991)

St. Jude Medical, Inc. v. Commis- sioner, ⁶

34 F.3d 1394 (8th Cir. 1994)

Hospital Corp. of America and Sub- sidiaries v. Commissioner, ⁷

109 T.C. 21 (1997)

1 Acquiescence in result only relating to whether gain on the sale of the debtor’s residence is excluded from gross income of the bankruptcy estate to the extent provided by I.R.C. §121 and in accord with section 1398. 2 Acquiescence in result only relating to whether, for estate tax valuation purposes, a minority interest in a closely-held corporation held in a Qualified Terminable Interest Property (QTIP) trust, which is includible in the gross estate under I.R.C. §2044, is aggregated with a minority interest in the same corporation that is includible in a decedent’s gross estate under other provisions of the Code. 3 Acquiescence in result only relating to whether the tests developed under the investment tax credit (ITC) prior to the 1981 adoption of the cost recovery system are applicable in determining a structural component for the purposes of Accelerated Cost Recovery System (ACRS) and Modified Accelerated Cost Recovery System (MACRS). 4 Acquiescence in result only relating to whether a meal furnished by the taxpayer/employer on its business premises to an employee is furnished for “the convenience of the employer” within the meaning of that phrase in section 119 of the Internal Revenue Code. 5 Nonacquiescence in result only relating to whether the term “accumulated profits” as used in the denominator of the section 902 deemed paid credit fraction before the Tax Reform Act of 1986 means all of a foreign corporation’s accumulated profits for the taxable year. This revised action on decision clarifies the Service’s position on this issue in cases appealable to the 11th Circuit. 6 Nonacquiescence in result only relating to whether section 1.861–8(e)(3) of the Income Tax Regulations is invalid as applied to DISC combined taxable income (CTI) calculations. 7 Nonacquiescence in result only relating to whether certain items treated as tangible personal property and depreciated over a 5-year recovery period were in fact structural components of the buildings to which they relate which must be depreciated over the same recovery period as the buildings, pursuant to I.R.C. § 168.

August 30, 1999 314 1999–35 I.R.B.