In the case before us, the petitioner actually received the notice of deficiency on October 2, 1981, 16 days after the Commissioner mailed it. He promptly had it delivered to his accountant, who forwarded it to the partnership attorney in San Francisco. Under the circumstances, we need not decide who has the burden of proving that the petitioner actually received the misaddressed notice without prejudicial delay. It is clear on this record that the petitioner received actual notice of the deficiency with ample time remaining to file a petition. At that time, the petitioner became responsible for filing a timely petition with this Court. There is no explanation for the failure to file such a petition, but it is apparent that inaction, after the receipt of the notice, was responsible for the late filing. Hence, the petitioner's failure to file a timely petition cannot be said to have been the direct result of any error in the address to which the notice of deficiency was mailed. Shelton v. Commissioner, 63 T.C. 193, 198 (1974); Zikria v. Williams, 535 F. Supp. 481, 485 (W.D. Pa. 1982). Clearly, the purpose of section 6212(a) was served in this case: the petitioner received "his ticket to the Tax Court and ample opportunity to file a petition for review." Delman v. Commissioner, 384 F.2d at 934.3 We agree with the Ninth Circuit that, "if mailing results in actual notice without prejudicial delay (as clearly was the case here), it meets the conditions of §6212(a) no matter to what address the notice successfully was sent." Clodfelter v. Commissioner, 527 F.2d at 757; fn. ref. omitted. A contrary conclusion is not compelled by the decisions in Weinroth v. Commissioner, 74 T.C. 430 (1980); Keeton v. Commissioner, 74 T.C. 377 (1980); Shelton v. Commissioner, supra; Heaberlin v. Commissioner, 34 T.C. 58 (1960); and Carbone v. Commissioner, 8 T.C. 207 (1947). In none of those cases was there a finding that the taxpayer received actual notice of the Commissioner's determination with sufficient time to prepare and file a petition; in Weinroth, Shelton, and Carbone, the taxpayers received no notice at all until the Commissioner billed them for the deficiencies. Where the "The petitioner also argues that he was prejudiced by the delay in receiving the notice in that he did not have the full 90 days to study it and prepare a petition. This argument is also foreclosed by our decision in Frieling v. Commissioner, 81 T.C. 42, 57 (1983), where we stated "However, so long as the notice of deficiency is timely mailed by the Commissioner and is received without prejudicial delay by the taxpayer in compliance with section 6212(a), the notice is effective for all purposes from the time of its mailing." Commissioner does not rely on actual notice but chooses to utilize the safe harbor of section 6212(b)(1), he must send the notice to the taxpayer at his last known address. Clodfelter v. Commissioner, 527 F.2d at 757; Berger v. Commissioner, 404 F.2d at 674. Where the notice is sent to the wrong address and never delivered, or delivered with prejudicial delay, the statutory purpose is not served, and it would be manifestly unfair to deny the taxpayer his prepayment hearing; but that is not this case. Zikria v. Williams, 535 F. Supp. at 485; Goolsby v. Tomlinson, 246 F. Supp. 674 (S.D. Fla. 1965). We hold that the notice of deficiency herein is valid. Accordingly, we will deny the petitioner's motion to dismiss and grant the Commissioner's motion to dismiss this case since the petition was not timely filed. An appropriate order will be entered. Reviewed by the Court. STERRETT, J., dissenting: I respectfully dissent for the same reasons stated in Frieling v. Commissioner, 81 T.C. 42 (1983). GOFFE, J., agrees with this dissent. E-B GRAIN Co., ET AL.,' PETITIONERS V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket Nos. 4291-82-4293-82. Filed August 3, 1983. P qualified as an electing small business corporation for its fiscal year ending July 31, 1977. P's small business election was revoked for its fiscal year 1978. The 15th day of the 3d month following the close of P's fiscal year 1977 (i.e., Oct. 15, 1977) fell on a Saturday, and P was closed for business on that date. On 'Cases of the following petitioners are consolidated herewith: Kirby L. Everette and Dorothy G. Everette, docket No. 4292-82; Marvin R. Everette and Bernice J. Everette, docket No. 4293–82. Monday, Oct. 17, 1977, P made two distributions to its share- Linwood L. Davis and Gregory L. Smith, for the petitioners. Alan I. Weinberg, Theodore J. Kletnick, and Cynthia J. Mattson, for the respondent. OPINION KÖRNER, Judge: In these consolidated cases, respondent determined deficiencies in Federal income tax as follows: After concessions by both parties,2 the sole issue for decision is whether distributions made on October 17, 1977, by E-B Grain Co., Inc. (hereinafter E-B Grain), were timely under the provisions of section 1375(f)(1). 3 3 This case was submitted fully stipulated pursuant to Rule 122. The stipulations of fact and attached exhibits are incorpo "Both parties either conceded or settled the issues pertaining to several commodity transactions; the losses related to and the fair rental value of a beach cottage; and depreciation, finance charges, and rental expenses relating to E-B Grain. 'All statutory references are to the Internal Revenue Code of 1954 as amended and in effect for the years in issue, and all references to Rules are to the Tax Court Rules of Practice and Procedure. rated herein by this reference. The pertinent facts are summarized below. Kirby L. Everette (hereinafter Kirby) and Dorothy G. Everette, husband and wife, resided in Battleboro, N.C., at the time of the filing of their petition herein. Marvin R. Everette (hereinafter Marvin) and Bernice J. Everette, husband and wife, resided in Rocky Mount, N.C., at the time of the filing of their petition herein. E-B Grain was a corporation whose principal place of business was in Battleboro, N.C., when it filed its petition herein. (Hereinafter when "petitioners" is used, it will collectively refer to all the above-mentioned parties.) Kirby and Marvin filed their calendar year joint Federal income tax returns for the year 1977 with the Office of the Internal Revenue Service located in Memphis, Tenn., using the cash receipts and disbursements method of accounting. EB Grain filed its Federal corporate income tax returns, based on a fiscal year ending July 31, with the Internal Revenue Service located in Memphis, Tenn. During their taxable year 1977, Kirby and Marvin each owned 50 percent of the outstanding shares of E-B Grain. E-B Grain was an electing small business corporation within the meaning of section 1372 for its fiscal years ending July 31, 1976 and 1977. The small business election was revoked for EB Grain's fiscal year ending July 31, 1978. The 15th day of the 3d month following the close of E-B Grain's fiscal year ending July 31, 1977 (i.e., October 15, 1977), fell on a Saturday. E-B Grain was closed for business on that date. On Monday, October 17, 1977, E-B Grain made two cash distributions of $50,000, one to Kirby and the other to Marvin, with respect to their stock interests. E-B Grain made each distribution through a company check made out to the order of the respective payees, and dated October 17, 1977. The two $50,000 distributions did not exceed Kirby and Marvin's respective shares of E-B Grain's undistributed taxable income for its fiscal year ending July 31, 1977. At all times relevant herein, E-B Grain had current and accumulated earnings and profits in excess of $100,000. In their 1977 returns, Kirby and Marvin each treated the $50,000 distribution from E-B Grain as distributions of previ ously taxed income pursuant to section 1375(d) and therefore omitted these amounts from taxable income. Respondent determined that the distributions were taxable dividends received from E-B Grain and accordingly increased each petitioner's income by $50,000. It is respondent's position that these distributions were not timely within the intendment of section 1375(f)(1) and must therefore be characterized under section 301 as taxable dividends. The right of an electing small business corporation to make a nontaxable distribution of previously taxed income under section 1375(d) expires when the company's election is terminated. See sec. 1375(d)(2)(A); secs. 1.1375-4(a), 1.1375–6, Income Tax Regs. Since E-B Grain's election was terminated for its fiscal year ending July 31, 1978, distributions made by E-B Grain during that year must be characterized by reference to section 301 unless such distributions were timely under section 1375(f)(1). See Stein v. Commissioner, 65 T.C. 336 (1975). Section 1375(f)(1), as in effect during the years in issue, provided as follows:" Any distribution of money made by a corporation after the close of a taxable year with respect to which it was an electing small business corporation and on or before the 15th day of the third month following the close of such taxable year to a person who was a shareholder of such corporation at the close of such taxable year shall be treated as a distribution of the corporation's undistributed taxable income for such year, to the extent such distribution (when added to the sum of all prior distributions of money made to such person by such corporation following the close of such year) does not exceed such person's share of the corporation's undistributed taxable income for such year. Any distribution so treated shall, for purposes of this chapter, be considered a distribution which is not a dividend, and the earnings and profits of the corporation shall not be reduced by reason of such distribution. Section 7503 provides in pertinent part: When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday *The Subchapter S Revision Act of 1982 significantly altered the rules applicable to electing small business corporations. See Pub. L. 97-354, 96 Stat. 1669. These new rules are effective generally for tax years beginning after 1982. |