Background
Petitioner Howard E. Clendenen, Inc. (the corporation), is a corporation with a mailing address in Des Moines, Iowa. On May 22, 1996, respondent sent the corporation a notice of deficiency determining the following deficiencies in the corporation’s Federal income taxes:
Tax Year Ended
Deficiency
6/30/87 $10,273 6/30/88 32,607 6/30/89 13,775 In this notice of deficiency, respondent determined that the corporation’s employee stock ownership plan (the plan) was a nonqualified plan because it did not meet the requirements of section 401(a). On August 21, 1996, the corporation filed a petition with the Court alleging error in respondent’s determination that the plan is nonqualified.
On May 22, 1996, respondent sent petitioner Howard E. Clendenen (Mr. Clendenen) a notice of deficiency determining deficiencies in his Federal income taxes, an addition to tax, and an accuracy-related penalty as follows:
Addition to Tax
Penalty
Tax Year
Deficiency
1987 $13,641 — — 1988 34,071 $1,704 — 1989 1,187 — $237 In this notice of deficiency, respondent based the determinations on the plan’s being nonqualified. On August 21, 1996, Mr. Clendenen filed a petition with the Court in which Mr. Clendenen referred to the “erroneous allegation that said trust is not qualified.”
On September 29, 1997, the parties in both cases each filed a joint motion for continuance. The parties sought a continuance in order to present the plan qualification issue to the Court in a declaratory judgment action, Howard E. Clendenen, Inc. v. Commissioner , docket No. 18155-96R, because the qualified status of the plan was the significant issue in these cases. On October 2, 1997, the Court granted these motions.
On February 13, 1998, the corporation and Mr. Clendenen each filed a Stipulation of Settled Issues. The corporation’s stipulation of settled issues provided in part:
8. For the taxable year ended June 30, 1987, the parties agree that the issue designated “ESOP Contribution to Non-Qualified Plan” in the notice of deficiency is consequential to the issue of plan qualification in related docket 18155-96 “R”.
9. For the taxable year ended June 30, 1988, the parties agree that the issue designated “Deductible Dividends to ESOP” in the notice of deficiency is consequential to the issue of plan qualification in related docket 18155-96 “R”.
10. For the taxable year ended June 30, 1988, the parties agree that the issue designated “Non-Qualified Contribution - Allowed in Yr. included in 1040" in the notice of deficiency is consequential to the issue of plan qualification in related docket 18155-96 “R”.
11. For the taxable year ended June 30, 1989, the parties agree that the issues designated “ESOP Contribution to Non-Qualified Plan” and “Deductible Dividends to ESOP” in the notice of deficiency are consequential to the issue of plan qualification in related docket 18155-96 “R”. Respondent and the corporation signed this stipulation of settled issues.
Mr. Clendenen’s stipulation of settled issues provided in part:
9. For the taxable year 1987, the parties agree that the issue designated “Employer Contribution” and “Deferred Compensation” in the notice of deficiency are consequential to the issue of plan qualification in related docket 1815596 “R”. 10. For the taxable year 1988, the parties agree that this stipulation resolves all issues in dispute. 11. For the taxable year 1989, the parties agree that the remaining issue, designated “Employer Contribution” in the notice of deficiency is consequential to the issue of plan qualification in related docket 18155-96 “R”. Respondent and Mr. Clendenen signed this stipulation of settled issues.
On February 13, 1998, the corporation and Mr. Clendenen also each filed a Stipulation To Be Bound. The corporation’s stipulation to be bound stated that the only remaining issues in dispute relate to the plan qualification as asserted in paragraphs 4(a) and (b) in the petition. Further, the corporation’s stipulation to be bound provided in part: 2. The adjustments in respondent’s notice of deficiency relating to the issues or items asserted in paragraphs 4(a) and (b) of the petition, as specified in the preamble, shall be determined by the resolution of the qualified status of the Howard E. Clendenen, Inc., Employee Stock Ownership Plan in Docket No. 18155-96 “R” (whether litigated or settled), with respect to the following taxpayer:
Name of Case: Howard E. Clendenen, Inc. v. Commissioner
Tax Court Docket No.: 18155-96 “R”
(hereinafter the CONTROLLING CASE).
3. The petitioner in this case is the same as the taxpayer in the CONTROLLING CASE.
Mr. Clendenen’s stipulation to be bound provided that the only remaining issues in dispute involve the issues asserted in paragraph 4(a) of the petition that relate to the plan’s qualification. Further, Mr. Clendenen’s stipulation to be bound provided in part:
2. The adjustments in respondent’s notice of deficiency relating to the issues or items asserted in paragraph 4(a) of the petition, as specified in the preamble, shall be determined by the resolution of the qualified status of the Howard E. Clendenen, Inc., Employee Stock Ownership Plan in Docket No. 18155-96 “R” (whether litigated or settled), with respect to the following taxpayer:
Name of Case: Howard E. Clendenen, Inc. v. Commissioner
Tax Court Docket No.: 18155-96 “R”
(hereinafter the CONTROLLING CASE).
3. All issues involving the above adjustments shall be resolved as if the petitioner in this case were the same as the taxpayer in the CONTROLLING CASE.
Both stipulations to be bound also provided:
4. A decision shall be submitted in this case when the decision in the CONTROLLING CASE (whether litigated or settled) becomes final under I.R.C. § 7481.
5. Upon entry of the decision in the CONTROLLING CASE, petitioner consents to the assessment and collection of the deficiencies attributable to the adjustments formulated by reference to the Tax Court’s opinion, notwithstanding the restrictions under I.R.C. § 6213(a).
The parties agree to this STIPULATION TO BE BOUND.
contribution and $9,000 treated as an employer contribution for taxable year ended June 30, 1987. The source of many of petitioners’ calculations; i.e., figures for taxable years ended June 30, 1984 and 1985, is unclear, and such figures are not reflected in the instant records. The declaratory judgment clearly examined the years at issue. We do not question those calculations. We therefore shall grant respondent’s motions for entry of decision.
In reaching all of our holdings herein, we have considered all arguments made by the parties, and, to the extent not herein discussed, we conclude them to be irrelevant or without merit. To reflect the foregoing, Appropriate orders and decisions will be entered .