Carpenter Family Invs., LLC v. Comm'r

*373 WHERRY, Judge: This case is before the Court on petitioner's motion for summary judgment filed September 28, 2009. Respondent filed an objection to petitioner's motion on November 20, 2009. Petitioner filed a memorandum in support of its motion on July 27, 2010. The issue is whether the notice of final partnership administrative adjustment (FPAA) challenged in the petition was issued *18 before the applicable period of limitations for assessing tax had expired. Our decision turns on whether the general 3-year period of limitations under section 6501(a) or the extended 6-year period of limitations under section 6229(c)(2) or section 6501(e)(1)(A)*374 applies. ¹ This is an issue of law and may be disposed of by summary judgment pursuant to Rule 121, Tax Court Rules of Practice and Procedure. See also Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992) ("Summary judgment is appropriate if the pleadings and other materials show that there is no genuine issue as to any material fact and a decision may be rendered as a matter of law."), affd. 17 F.3d 965 (7th Cir. 1994); Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988) ("Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials.").

The following facts are not in dispute. Petitioner, Carpenter Capital Management, LLC, is a Nevada limited liability company classified as a partnership for Federal income tax purposes. Petitioner is the tax *19 matters partner of Carpenter Family Investments, LLC, an Oregon limited liability company classified as a partnership for Federal income tax purposes with its principal place of business in Salem, Oregon (the partnership).

At the end of its 2000 taxable year the partnership was owned as follows: Tommie Carpenter, 0.5 percent; Virginia Carpenter, 0.5 percent; petitioner, 99 percent. During the taxable year ending December 31, 2000, petitioner was owned as follows: Tommie Carpenter, 75.25 percent and Virginia Carpenter, 24.75 percent. Accordingly, Tommie and Virginia Carpenter (the partners) ultimately were allocated all items of income, gain, loss, deduction, and credit of the partnership.

During its 2000 taxable year the partnership sold shares of stock of American Tower Corp. (ATC), a publicly traded corporation listed on the New York Stock Exchange, for total proceeds of $29,608,861 (the stock sale). On or before October 15, 2001, the partnership timely filed Form 1065, U.S. Return of Partnership Income, for its taxable year ending December 31, 2000. On this information return the partnership reported gross proceeds of $29,608,861, an adjusted tax *375 basis of $23,285,745, and gain of *20 $6,323,116 from the stock sale. On or before October 15, 2001, the partners timely filed a joint income tax return on Form 1040, U.S. Individual Income Tax Return, for calendar year 2000. On this tax return the partners reported all of the $6,323,116 gain from the stock sale.

On April 10, 2007, petitioner sent to respondent a Form 872-P, Consent to Extend the Time to Assess Tax Attributable to Partnership Items, executed on behalf of the partnership. Also on April 10, 2007, the partners sent to respondent an executed Form 872-I, Consent to Extend the Time to Assess Tax As Well As Tax Attributable to Items of a Partnership. On October 2, 2008, respondent issued an FPAA to petitioner, as tax matters partner of the partnership, for the partnership's taxable year ending December 31, 2000.

Respondent alleges that "the partnership exploited a complex series of basis-inflating tax avoidance transactions (a variant of the Son-of-BOSS shelter described in Notice 2000-44) beginning in December 1999." See Notice 2000-44, 2000-2 C.B. 255, which describes so-called Son-of-BOSS transactions. See also Kligfeld Holdings v. Commissioner, 128 T.C. 192, 194 (2007), discussing *21 the prototypical Son-of-BOSS transaction:

Son-of-BOSS is a variation of a slightly older alleged tax shelter known as BOSS, an acronym for "bond and options sales strategy." There are a number of different types of Son-of-BOSS transactions, but what they all have in common is the transfer of assets encumbered by significant liabilities to a partnership, with the goal of increasing basis in that partnership. The liabilities are usually obligations to buy securities, and typically are not completely fixed at the time of transfer. This may let the partnership treat the liabilities as uncertain, which may let the partnership ignore them in computing basis. If so, the result is that the partners will have a basis in the partnership so great as to provide for large--but not out-of-pocket--losses on their individual tax returns.

* * *

Respondent claims a Son-of-BOSS shelter is at work on account of a transfer to the partnership "of short sale proceeds of Treasury Notes and the obligation to close the open short sale position". Respondent contends that this transfer "artificially stepped-up inside basis". According to respondent: "As a result of the artificial step-up in basis in *376 the American *22 Tower Corporation stock, the partnership's total net long-term gains derived from dealings in property on its 2000 return was [significantly] understated".

Petitioner moved for summary judgment, arguing that the FPAA was not timely because it was issued after "The period of limitations imposed by I.R.C. § 6501 on assessment and collection of tax * * * [of] three years from the date the return to which the tax relates was filed." Both the partnership's information tax return and the partners' joint income tax return were filed on or before October 15, 2001. The 3-year limitations period, if applicable, would have expired on or before October 15, 2004. Petitioner contends that "Because the FPAA was issued after October 15, 2004, respondent is precluded from assessing any tax attributable to items reported on the Partnership Tax Return."

Petitioner further argues that the untimeliness of the FPAA invalidates petitioner's and the partners' consents to extend the limitations period. "Neither of the Forms 872 signed by petitioner or the Partners was executed before the expiration of the three-year period of limitations imposed by I.R.C. § 6501(a) or 6229(a)." *23 As a result, according to petitioner, these consents cannot be used "to reopen the three-year period of limitations on assessment and collection of tax." See sec. 6501(c)(4) ("Where, before the expiration of the time prescribed in this section for the assessment of any tax imposed by this title, * * * both the Secretary and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon." (Emphasis supplied.)); see also Romine v. Commissioner, 25 T.C. 859, 871 (1956) (holding that if a taxpayer executes a consent after the expiration of the 3-year limitations period, the Commissioner bears the burden of proving that a longer limitations period applies and that the consent was obtained within such longer period); Seltzer v. Commissioner, 21 T.C. 398 (1953) (same).

Respondent claims that the applicable period of limitations is not 3 years but 6 years, as provided in sections 6229(c)(2) and 6501(e)(1)(A).

On September 24, 2009, the Treasury Department and the Internal Revenue Service issued temporary Treasury regulations under Sections 6229(c)(2) and 6501(e)(1)(A) that *24 clarify that an overstatement of basis relating to the disposition of property, other than the sale of goods or services in a trade or business, constitutes an omission from gross income for purposes of Sections 6229(c)(2) and 6501(e)(1)(A).Respondent argues that these temporary regulations, sections 301.6229(c)(2)-1T and 301.6501(e)-1T, Temporary Proced. & Admin. Regs., 74 Fed. Reg. 49322-49323 (Sept. 28, 2009), extend the limitations period for the partnership's 2000 taxable year to 6 years because they "apply to taxable years with respect to which the applicable period for assessing tax, as interpreted in the temporary regulations, did not expire before September 24, 2009."

Because "The FPAA * * * issued within the six-year period of limitations provided in Sections 6229(c)(2) and 6501(e)(1)(A), as further extended by consent," respondent contends that the FPAA was timely.

We have previously held invalid the temporary regulations respondent cites. See Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. 211, 224 (2010). ² Since we issued our Opinion in Intermountain, the Commissioner has issued these regulations in final form. See secs. 301.6229(c)(2)-1, *25 301.6501(e)-1, Proced. & Admin. Regs. Also, the Supreme Court has issued its opinion in Mayo Found. v. United States, 562 U.S.    , 131 S. Ct. 704, 178 L. Ed. 2d 588 (2011), which clarifies that the Commissioner's regulatory efforts are generally entitled to the same Chevron standard as those of any other agency. See Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837, *378 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (establishing a two-step framework for testing the validity of an agency's interpretation of ambiguous statutes). We take this opportunity to consider whether anything in the final regulations or their preamble or Mayo warrants a revision of our Intermountain holding. ^{3*26 *27}

The preamble to these final regulations asserts that "The Tax Court's majority in Intermountain erroneously interpreted the applicability provisions of the temporary and proposed regulations". T.D. 9511, 2011-6 I.R.B. 455, 456. We are not infallible and have reviewed our interpretation of the regulations' applicability provisions in the light of respondent's criticism, but as discussed below we still do not agree with respondent.

The temporary regulations provided that "The rules of this section apply to taxable years with respect to which the applicable period for assessing tax did not expire before September 24, 2009." Secs. 301.6229(c)(2)-1T(b), 301.6501(e)-1T(b), Temporary Proced. & Admin. Regs., supra (emphasis supplied). In Intermountain Ins. Serv. of Vail, LLC v. Commissioner, supra at 218-219, we had commented on the "notably convoluted interpretation of the effective/applicability date provisions" required to cause the temporary regulations to apply to a case where the 3-year limitations period has already expired. We had *28 remarked that the Commissioner's attempt to apply the temporary regulations in that case "begs the question". Id.

*379 By comparison with the effective/applicability date provisions of the temporary regulations, the final regulations provide that "This section applies to taxable years with respect to which the period for assessing tax was open on or after September 24, 2009." Sec. 301.6229(c)(2)-1(b), Proced. & Admin. Regs. (emphasis supplied); see also sec. 301.6501(e)-1(e), Proced. & Admin. Regs. Respondent and the Treasury Department contend that "The final regulations * * * clarify the effective/applicability date provisions in the section 6229(c)(2) and section 6501(e) regulations to eliminate a perceived ambiguity in the temporary regulations, that was brought to light by the Tax Court in Intermountain Insurance Service of Vail v. Commissioner, 134 T.C. 211, 134 T.C. No. 11 (2010), appeal docketed, No. 10-1204 (D.C. Cir.)." T.D. 9511, 2011-6 I.R.B. at 455.

We fail *29 to see how this semantic distinction in the effective/applicability date provisions between the final regulations and the temporary regulations, the verbal equivalent of the other side of the same coin, begets a response to the begged question.

Unlike the terse text of the final regulations' effective/applicability date provisions, the accompanying preamble contends at length that

The Internal Revenue Service will continue to adhere to the position that "the applicable period" of limitations is not the "general" three-year limitations period. * * * The expiration of the three-year period does not "close" a taxable year if a longer period applies. * * *T.D. 9511, 2011-6 I.R.B. at 456 (emphasis supplied). However, whether or not a longer period should, in fact, apply is the very subject matter, the sum and substance of the regulations. ^{4*31 *32} Clearly, then, as with the temporary regulations, *380 in order to apply the final regulations to a taxable year after the expiration of the "general" 3-year limitations period, one must presuppose that the regulations are otherwise valid and that they apply retroactively. ^5*33 In other words, the applicability of the regulations assumes their substantive validity. *30 We held this assumption untenable in Intermountain Ins. Serv. of Vail, LLC v. Commissioner at 224. After reviewing the final regulations and their preamble and considering any effect that Mayo may have, we reaffirm our prior conclusion for the reasons set forth below.

As we did previously when reviewing the temporary regulations, and as we now do in testing the final regulations, we "must judge the propriety of * * * [respondent's] action solely by the grounds invoked by" him. SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S. Ct. 1575, 91 L. Ed. 1995 (1947). ^6*35 From the preambles to the *381 temporary and final regulations, we isolate two discrete *34 grounds that respondent can possibly adduce as bases upon which his regulatory project "purports to rest", id.: (1) The Supreme Court's holding in Colony, Inc. v. Commissioner, 357 U.S. 28, 78 S. Ct. 1033, 2 L. Ed. 2d 1119, 1958-2 C.B. 1005 (1958), which excluded overstatement of basis from the phrase "omits from gross income" in the identically worded predecessor of current section 6501(e)(1)(A), was confined by section 6501(e)(1)(A)(i) to a trade or business context; ^7*36 and (2) Colony represents the Supreme Court's own construction of this phrase as it now appears in section 6501(e)(1)(A), rather than an explication of unambiguous congressional intent.

These two grounds are mutually exclusive. If the Colony holding has been statutorily confined to a trade or business context, it cannot any longer constitute the Supreme Court's interpretation of current section 6501(e)(1)(A). Conversely, if Colony represents the Supreme Court's own construction of this text, the holding must necessarily extend beyond just trade or business.

Respondent leads with the former contention, which he vociferously espouses, not just in the preambles to the temporary and final regulations, but also in his submissions on brief in this and other similar cases. ⁸ The latter claim, on the other hand, is presented with great circumspection. After being absent in the preamble to the temporary regulations, this claim appears stealthily in the final regulations' preamble, *382 and even there is shrouded in caveats and qualifications. ⁹

The final regulations' preamble reiterates respondent's position, "set forth in the preamble to the temporary regulations", that "the *37 Supreme Court's opinion in Colony v. Commissioner, 357 U.S. 28, 78 S. Ct. 1033, 2 L. Ed. 2d 1119, 1958-2 C.B. 1005 (1958), * * * [is limited to] an omission from gross income in the context of a trade or business under the predecessor of section 6501(e)." T.D. 9511, 2011-6 I.R.B. at 455; see also T.D. 9466, 2009-43 I.R.B. 551, 552 ("Therefore, by amending the Internal Revenue Code, including the addition of a special definition of 'gross income' with respect to a trade or business, Congress effectively limited what ultimately became the holding in Colony, to cases subject to section 275(c) of the 1939 Internal Revenue Code."). This echoes similar arguments that the Commissioner has made on brief in related litigation across the country. ^10*38

This case would, absent stipulation to the contrary, be appealable to the U.S. Court of Appeals for the Ninth Circuit. That court has rejected the argument that the Colony holding is properly construed as limited to the sale of goods and services in a trade or business. "There is no ground for suggesting that the Court intended the same language in § 275(c) to *39 apply differently to taxpayers in a trade or business than to other taxpayers." Bakersfield Energy Partners, LP v. Commissioner, 568 F.3d 767, 778 (9th Cir. 2009), affg. 128 T.C. 207 (2007).

*383 In Bakersfield, the Court of Appeals for the Ninth Circuit held that the current section 6501(e)(1)(A), which was enacted as part of the Internal Revenue Code of 1954, did not constitute a "new statutory setting" for the phrase "omits from gross income".

Congress did not change the language in the body of § 6501(e)(1)(A), which is identical to the language in § 275(c) that the Supreme Court construed in Colony. As a general rule, we construe words in a new statute that are identical to words in a prior statute as having the same meaning. * * *Id. at 775. Finding "that applying Colony to the 1954 Code would [not] render * * * superfluous" any provision of section 6501(e)(1)(A), id. at 776, the court went on to conclude that the Colony

holding controls our interpretation of the same language in § 275(c)'s successor provision, § 6501(e)(1)(A) of the 1954 Code. However sensible the IRS's argument may be that a taxpayer can "omit ... an amount" of gain by overstating its basis, this argument is foreclosed *40 by Colony. * * *Id. at 778.

The Court of Appeals for the Ninth Circuit's opinion in Bakersfield was quickly followed by an opinion of the Court of Appeals for the Federal Circuit that also failed to "discern any basis for limiting Colony's holding concerning the 'omits from gross income' language of I.R.C. § 275(c) to sales of goods or services by a trade or business." Salman Ranch Ltd. v. United States, 573 F.3d 1362, 1372 (Fed. Cir. 2009). ^11*41

These two Courts of Appeals have now been joined by the Courts of Appeals for the Fourth and Fifth Circuits, which have similarly declined to limit the Colony holding to a trade *384 or business. See Home Concrete & Supply, LLC v. United States, 634 F.3d 249, 255 (4th Cir. 2011) ("Like the Ninth and Federal Circuits, we hold that the Supreme Court in Colony straightforwardly construed the phrase 'omits from gross income,' unhinged from any dependency on the taxpayer's identity as a trade or business selling goods or services."); Burks v. United States, 633 F.3d 347, 355, 2011 U.S. App. LEXIS 2417, *20 (5th Cir. 2011) ("We join the Fourth, Ninth, and *42 Federal Circuits by finding that Colony's holding with respect to the definition of 'omits from gross income' [is not limited to trade or business and] remains applicable in light of the revisions to the Code.").

The Court of Appeals for the Seventh Circuit, on the other hand, has sided with the Commissioner and limited the applicability of Colony to an omission from income of a trade or business. See Beard v. Commissioner, 633 F.3d 616, 620, 2011 U.S. App. LEXIS 1575, *11 (7th Cir. 2011) (concluding that "Colony's holding is inherently qualified by the facts of the case * * *, where the * * * omission was * * * in the course of trade or business."), revg. T.C. Memo. 2009-184.

Following the Commissioner's judicial setbacks in Bakersfield and Salman Ranch, the Secretary issued the temporary regulations, seeking, as it were, to lay a regulatory foundation for respondent's position that an overstatement of basis does constitute an omission from gross income under section 6501(e)(1)(A). Respondent claims that this regulatory project "is entitled to deference even if the agency's interpretation may run contrary to the opinions in Bakersfield and Salman Ranch." See T.D. 9466, 2009-43 I.R.B. at 552. However, neither of those *43 opinions was based on the court's interpretation of section 6501(e)(1)(A). Instead, each court had held Colony to control this interpretation, which it, in turn, merely followed. In effect, then, respondent is asking us to defer to his determination of whether that Supreme Court decision is on point.

Amidst conflicting signals of legislative intent, Chevron and its progeny certainly require deference to the administering agency's interpretation of the resulting statutory language. However, we know of no authority, and respondent cites none, that requires us to defer to the Commissioner's determination of the applicability of Supreme Court precedent.

*385 When Congress speaks in muffled tones, the Commissioner presumably enjoys an advantage in deciphering the message. And though we are respectful of the Commissioner's experience in reviewing court opinions, we decline to surrender our prerogative of interpreting judicial pronouncements--ambiguous or otherwise.

Respondent does not purport, at least not explicitly and unequivocally, ¹² to elevate his interpretation of the text in current section 6501(e)(1)(A) above that of the Court in Colony. Rather, he seeks to persuade us, as he has succeeded *44 in persuading the Court of Appeals for the Seventh Circuit in Beard, ^{13*45 *46} that the Colony holding is not relevant to our inquiry. Respondent may arguably have the authority to attempt to reach the former outcome, at least in the Tenth Circuit. ¹⁴ But we, the U.S. Court of Federal Claims, and the U.S. District Courts, subject to review by the respective Courts of Appeals and the Supreme Court, retain ultimate authority over the latter, in all circuits. ^15*47

*386 FollowingBakersfield, we conclude thatColony is not limited to a trade or business, and that it controls our interpretation of section 6501(e)(1)(A). ^16*48

Such a conclusion, by itself, *49 does not rule out Chevron deference to the regulations. ^17*50 It does mean, however, that instead of applying the original version of the Chevron analysis, we apply its Brand X variant. ^18*51 Compare Chevron *387 U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. at 843 (upholding an agency's reasonable interpretation of a statute only if "Congress has not directly addressed the precise question at issue"), with Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 984 (allowing "a court's prior interpretation of a statute to override an agency's [contrary] interpretation only if the relevant court decision held the statute unambiguous").

In Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. at 224 (internal quotation marks omitted), we held that Colony "forecloses the agency's interpretation of sections 6229(c)(2) and 6501(e)(1)(A) and displaces respondent's temporary regulations." Nothing in the final regulations or their preamble, or Mayo gives us cause to revise that conclusion.

The Court of Appeals for the Ninth Circuit in Bakersfield Energy Partners, LP v. Commissioner, 568 F.3d at 778, conceded that in its Colony opinion, the Supreme Court had "acknowledged that the statutory language was ambiguous, but nonetheless rejected the same interpretation the IRS is proposing in *52 this case." (Citations omitted.) Respondent claims that this concession by the Court of Appeals constitutes an invitation to issue regulations to reverse the Bakersfield outcome. See T.D. 9466, 2009-43 I.R.B. at 552. The Court of Appeals had indeed stated that "The IRS may have the authority to promulgate a reasonable reinterpretation of an ambiguous provision of the tax code, even if its interpretation runs contrary to the Supreme Court's 'opinion as to the best reading' of the provision." Bakersfield Energy Partners, LP v. Commissioner, supra at 778 (quoting Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 983).

However, "The Court of Appeals did not indicate definitively whether any such * * * regulations would actually trump the Supreme Court's prior judicial construction." Intermountain *388 Ins. Serv. of Vail, LLC v. Commissioner, supra at 224 n.24. Assuming regulations that are not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law", and are issued in "observance of procedure required by law", 5 U.S.C. sec. 706(2)(A), (D) (2006), assumptions not necessarily satisfied here, there remain two unresolved issues that would potentially *53 affect the analysis: (1) Whether legislative history should be considered at step one of the two-step Chevron analysis; and (2) whether a construction of statutory language by the Supreme Court automatically renders the statute unambiguous.

With respect to the applicability of legislative history at Chevron step one, compare Natural Res. Def. Council v. U.S. EPA, 526 F.3d 591, 603 (9th Cir. 2008) ("An examination of the statutory language and its legislative history assists us in this [Chevron step one] inquiry."), with Schneider v. Chertoff, 450 F.3d 944, 955 n.15 (9th Cir. 2006) ("Although we cannot consider legislative history under the first prong of Chevron, * * * we note that the Secretary's regulation subverts the very intent of the Nursing Relief Act."). ^{19*54 *55}

Regarding whether an agency's interpretation can trump a prior Supreme Court construction of the same statutory language, compare Natl. Cable & Telecomms. Association v. Brand X Internet Servs., 545 U.S. at 1003 (Stevens, J., concurring) ("I add this caveat concerning * * * [that part of *389 the Court's opinion], which correctly explains why a court of appeals' interpretation of an ambiguous provision in a regulatory statute does not foreclose a contrary reading by the agency. That explanation would not necessarily be applicable to a decision by this Court that would presumably remove any pre-existing ambiguity."), with Hernandez-Carrera v. Carlson, 547 F.3d 1237, 1248 (10th Cir. 2008) ("we conclude *56 that the holding of Brand X applies whether the judicial precedent at issue is that of a lower court or the Supreme Court.").

We pause here to observe that the Supreme Court recently rejected a taxpayer challenge to section 31.3121(b)(10)-2, Employment Tax Regs., promulgated by the Treasury Department to define the word "student" in section 3121(b)(10)-2. Mayo Found. v. United States, 562 U.S.    , 131 S. Ct. 704, 178 L. Ed. 2d 588 (2011). In doing so, the Supreme Court clarified that the Chevron standard of deference applies to Treasury regulations. The Court pointed out that the taxpayer in Mayo had "not advanced any justification for applying a less deferential standard of review to Treasury Department regulations than we apply to the rules of any other agency." Id. at    , 131 S. Ct. at 713. The Court held that "In the absence of such justification, we are not inclined to carve out an approach to administrative review good for tax law only." Id.

The Supreme Court's opinion in Mayo implies, by omission rather than affirmative statement, that a trial court's investigation of congressional intent at Chevron step one be limited to the plain text of the statute. See id. at    , 131 S. Ct. at 711*57 ("In any event, the statutory text still would offer no insight into how Congress intended predominance to be determined or whether Congress thought that medical residents would satisfy the requirement. * * * In the typical case, such an ambiguity would lead us inexorably to Chevron step two" (emphasis supplied)).

Though Mayo tangentially addresses the first issue and appears to frown upon the use of legislative history at step one of a Chevron analysis, it is silent on the second issue of whether the Supreme Court's Brand X holding applies to its *390 own precedent. Mayo's silence on this score is not surprising since the Supreme Court had no occasion to interpret the word "student" in section 3121(b)(10)-2 before the Treasury Department's issuing of the challenged regulation.

By comparison, the Supreme Court's Colony holding predates the regulations at issue here by over half a century. Fortunately, and as we explain in Part IV, infra, respondent's indecision has spared us the ordeal of walking the plank and plumbing the depths of Brand X. ^20*58

Gaps in congressional enunciation, whether intentional or inadvertent, can be filled by the Commissioner to dictate the underlying meaning. So long as the Commissioner is reasonable, Chevron implies, and Mayo confirms, that we permit him to complete Congress' sentences, unless he contradicts the "unambiguously expressed intent of Congress." Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. at 843.

Where a court whose precedent is binding on us has previously interpreted the statutory language at issue, "if the prior court decision holds that its construction follows from the unambiguous terms of the statute", Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 982, then "that is the end of the matter", Chevron U.S.A. Inc. v. Natural Res. Def. Council, supra at 842. We, in turn, merely follow the precedent, which automatically "displaces a conflicting agency construction." Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 983. For *59 any court opinion of pre-Chevron vintage, we must confront and overcome the Chevron classification challenge on our own, without deference to annotations or commentary that the Commissioner may provide. ^21*60

*391 After maintaining silence on Colony's proper Chevron classification in the preamble to the temporary regulations, respondent apparently attempts to categorize Colony as a Chevron step two decision in the final regulations' preamble. Respondent contends that "The Supreme Court stated in Colony that the statutory phrase 'omits from gross income' is ambiguous, meaning that it is susceptible to more than one reasonable interpretation." T.D. 9511, 2011-6 I.R.B. at 455. In Intermountain, we rejected this contention and firmly placed Colony*61 in the Chevron step one category.

Since then, the Supreme Court has issued its Mayo opinion, which focuses exclusively on the statutory text at Chevron step one and suggests (by negative implication) a disfavor of using legislative history at that stage. We are not persuaded, however, that after Mayo, any judicial construction that examines legislative history is automatically relegated to a Chevron step two holding by that fact alone.

Mayo's directive to move "inexorably" from an ambiguity to Chevron step two is reserved for the "typical case". More importantly, the ambiguity Mayo talks about is not any textual ambiguity per se, but an ambiguity in congressional intent that remains after searching the "statutory text * * * [for] insight into how Congress intended" the language at issue to apply. Mayo Found. v. United States, 562 U.S. at    , 131 S. Ct. at 711. ^{22*62 *63}

*392 Brand X requires only that the prior judicial construction "follows from the unambiguous terms of the statute". Natl. Cable & Telecomms. Association v. Brand X Internet Servs., 545 U.S. at 982. ^23*64 It is entirely possible for a court's opinion to discover, acknowledge and comment upon textual ambiguities in the statute and yet rest its construction on the remaining "unambiguous terms of the statute". Having done so, the court may very well analyze legislative history for additional evidence of congressional intent supporting its construction. ²⁴

Whatever Mayo may or may not prescribe (or proscribe) with respect to legislative history at Chevron step one, surely that prescription (and proscription) comes too late for the "many hundreds of past statutory decisions", Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 1018 (Scalia, J., dissenting), that have in fact looked at legislative history, including Colony. ^25*65

Chevron restrains "Judges, [who] are not experts in the field, and are not part of either political branch of the Government * * * [from reconciling] competing political interests * * * on the basis of * * * [their] personal policy preferences." Chevron U.S.A. Inc. v. Natural Res. Def. *393 Council, 467 U.S. at 865. On the other hand, Brand X's concern is "'the ossification of large portions of our statutory law,' * * * [which would be caused] by precluding agencies from revising unwise judicial constructions of ambiguous statutes." Natl. Cable & Telecomms. Association v. Brand X Internet Servs., supra at 983*66 (quoting United States v. Mead Corp., 533 U.S. 218, 247, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001) (Scalia, J., dissenting)).

Brand X's principle for deciding whether or not "A court's prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference * * * follows from Chevron itself." Id. at 982. Thus, Brand X does not introduce any substantive constraints on judicial statutory construction independent of, and in addition to, Chevron's warning to "federal judges--who have no constituency--* * * to respect legitimate policy choices made by those who do." 467 U.S. at 866. It stands to reason, therefore, that only if an "unwise judicial construction" represents a policy choice, must it yield to "the wisdom of the agency's policy". Id.

For "deossification" of judiciary's historical "un-wisdom" to proceed, what would matter, then, are not the tools a court had employed in constructing the statute, ^26*68 but the considerations it weighed during that process. Agencies should, thus, be free to revisit and reject a past judicial statutory construction but only if the construction arose from "assessing the wisdom of * * * policy choices and resolving the struggle between competing views *67 of the public interest". Id.

*394 The Supreme Court in Colony did allude to a policy concern when it mentioned that a contrary result would "create a patent incongruity in the tax law." Colony, Inc. v. Commissioner, 357 U.S. at 36-37. However, this statement was offered merely to buttress the Court's central conclusion that "We think that in enacting § 275(c)Congress manifested no broader purpose" than the one the Court was attributing to it and that to attribute a different purpose "would be to read § 275(c) more broadly than is justified by the evident reason for its enactment". Id. at 36. Emphasis supplied. We find these statements sufficient to conclude that Colony reveals *69 unambiguous congressional intent rather than a policy choice the Court was making in the absence of agency guidance. Consequently, as we did in Intermountain, even after Mayo, we classify Colony as a Chevron step one holding. ^27*70

We do not consider the Court of Appeals for the Ninth Circuit's observation that the Supreme Court in Colony had "acknowledged that the statutory language was ambiguous," Bakersfield Energy Partners, LP v. Commissioner, 568 F.3d at 778, fatal to Colony's Chevron step one status in that circuit. Even if we were to assume that the Court of Appeals for the Ninth Circuit would treat Colony as a Chevron*71 step two holding, ^{28*72 *73} respondent's regulatory appeal to Brand X to *395 supplant the Colony holding fails to meet the Chenery test. See SEC v. Chenery Corp., 332 U.S. at 196-197 (holding, with respect to "the basis upon which * * * [administrative action] purports to rest," that "a court [cannot] be expected to chisel that which must be precise from what the agency has left vague and indecisive.").

Respondent persists in drawing a sheathed sword to attack a statute of limitations defense to an alleged abusive Son-of-BOSS sheltering transaction. ²⁹

Respondent may desire to repeal Colony in the name of Brand X. If so, he should decisively say as much. SEC v. Chenery Corp., supra at 196 ("If the administrative action is to be *74 tested by the basis upon which it purports to rest, that basis must be set forth with such clarity as to be understandable.").

Respondent declares in the final regulations' preamble that "The interpretation adopted by the Supreme Court in Colony represented that court's interpretation of the phrase ['omits from gross income'] but not the only permissible interpretation of it." T.D. 9511, 2011-6 I.R.B. at 455. Appealing to Brand X and asserting his privilege "to adopt another *396 reasonable interpretation of" that phrase, respondent equivocates in the next breath, by adding the proviso "particularly as * * * [that phrase] is used in a new statutory setting." Id. As discussed above, the Court of Appeals for the Ninth Circuit has rejected the proposition that section 6501(e)(1)(A) constitutes "a new statutory setting" for the phrase "omits from gross income".

The appeal to Brand X in the final regulations' preamble is further attenuated by a preceding statement that reiterates respondent's position that Colony "dealt with an omission from gross income in the context of a trade or business under the predecessor of section 6501(e)" and no longer "applies to sections 6501(e)(1) and 6229(c)(2)". *75 Id.

"It will not do for a court to be compelled to guess at the theory underlying the agency's action". SEC v. Chenery Corp., supra at 196-197. Even if we read the Supreme Court's recent Mayo opinion as a license to categorize most judicial constructions that discuss legislative history as Chevron step two decisions, respondent has yet to unabashedly accept the Court of Appeals for the Ninth Circuit's invitation and issue regulations that unequivocally repudiate the Colony holding. Unless and until he does so, his hands must remain tied. ^30*76 Consequently, his discretion in interpreting section 6501(e)(1)(A), howsoever noble and worthy of deference, must remain circumscribed.

When enacting section 6501(e)(1)(A) in 1954, Congress could not possibly have foreseen the development of the tax shelter industry and the use of complex devices, such as Son-of-BOSS transactions, which seek to artificially inflate bases of partnership assets to achieve tax alchemy. Much as we *397 may be tempted, we cannot speculate on how the Congress that enacted section 6501(e)(1)(A) would have meant it to apply in the present-day context. To paraphrase Justice Holmes, we do not inquire what the legislature would have meant. Cf. Holmes, "The *77 Theory of Legal Interpretation", 12 Harv. L. Rev. 417, 419 (1899), reprinted in Collected Legal Papers 207 (1920) ("We do not inquire what the legislature meant; we ask only what the statute means."). In this case, we do not even ask what the statute means; we merely ask what the Court of Appeals for the Ninth Circuit and the Supreme Court have told us the statute means.

The Court of Appeals for the Ninth Circuit tells us that Colony controls the meaning of the phrase "omits from gross income" as it now appears in section 6501(e)(1)(A). Bakersfield Energy Partners, LP v. Commissioner, 568 F.3d at 778. And the Supreme Court has told us, in Colony, that this phrase does not include an overstatement of basis. We thus hold that only a 3-year limitations period under section 6501(a) applies here. Consequently, we hold the FPAA issued after the expiration of this 3-year period to be untimely. We further hold petitioner's and the partners' consents executed after the FPAA was issued to be invalid. We will therefore grant petitioner's motion for summary judgment. The Court has considered all of respondent's contentions, arguments, requests, and statements. To the extent not discussed herein, *78 we conclude that they are meritless, moot, or irrelevant.

To reflect the foregoing,

An appropriate order and decision will be entered.

Reviewed by the Court.

COLVIN, GOEKE, and KROUPA, JJ., agree with this opinion.

MARVEL, J., concurs in the result only.

GUSTAFSON and MORRISON, JJ., did not participate in the consideration of this opinion.

HALPERN and HOLMES, JJ., concurring:

We have joined Judge Thornton's concurring opinion, which would grant petitioner's motion for summary judgment *398 on the ground of this Court's prior decisions consistently holding that our construction of section 6501(e)(1)(A) follows from the unambiguous terms of the statute. ^1*80 That is a sufficient ground to dispose of this case and should end the matter. But the prevailing opinion ² does not stop there. Without benefit of argument from the parties, Judge Wherry has addressed the final regulations, sections 301.6229(c)(2)-1, 301.6501(e)-1, Proced. & Admin. Regs. (the final regulations), and found one reason to question them and two reasons to reject them. ^3*81 First, he suggests ("assumptions not necessarily * * * [contradicted] here") that they are "'arbitrary, capricious, an abuse *79 of discretion, or otherwise not in accordance with law', * * * [or not] issued in 'observance of procedure required by law'". Majority op. p. 26. Second, he classifies Colony, Inc. v. Commissioner, 357 U.S. 28, 78 S. Ct. 1033, 2 L. Ed. 2d 1119, 1958-2 C.B. 1005 (1958) (Colony), as a Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (Chevron), step one holding, which is contradicted by, and thus renders invalid, the final regulations (as we held in Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. 211, 224 (2010) (Intermountain) with respect to the temporary regulations). See majority op. pp. 25, 32. Finally, assuming arguendo that Colony is a Chevron step two holding, he disqualifies the final regulations as violating the Chenery doctrine, SEC v. Chenery Corp., 332 U.S. 194, 67 S. Ct. 1575, 91 L. Ed. 1995 (1947) (Chenery). Majority op. pp. 38-39.

*399 We file this concurring opinion because of the prominence of the prevailing opinion. See Bushnell v. Commissioner, 49 T.C. 296, 311 (1967) (Raum, J., concurring) (concurring opinion filed to rebut theory relied on in prevailing opinion). We address the second two of Judge Wherry's three reasons, the first (unless one and the same with the Chenery reason) giving us nothing to grasp.

Judge Wherry classifies Colony as a Chevron step one decision principally on the basis of our analysis in Intermountain. Majority op. p. 32. In Intermountain, 134 T.C. at 223-224, we stated that, on the basis of its review of the legislative history of the predecessor to section 6501(e)(1)(A), the Supreme Court in Colony "concluded that Congress' intent was clear and that the statutory provision was unambiguous." The Supreme Court, we added, found in that section's legislative history the narrow purpose of extending the 3-year period of limitations only when a taxpayer had omitted an item of gross income. Id. at 224. *82 ^4*83 We concluded:

In so holding, the Supreme Court found that the statute's legislative history clarified its otherwise ambiguous text and, as a result, explicated Congress' intent and the meaning of the statutory provision. Thus, the Supreme Court's opinion in Colony, Inc. v. Commissioner, supra, "unambiguously forecloses the agency's interpretation" of sections 6229(c)(2) and 6501(e)(1)(A) and displaces respondent's temporary regulations. See Natl. Cable & Telecomms. Association v. Brand X Internet Servs., * * * [545 U.S. 967, 983, 125 S. Ct. 2688, 162 L. Ed. 2d 820 (2005) (Brand X)]. Consequently, the temporary regulations are invalid and are not entitled to deferential treatment.Id. (fn. refs. omitted).

While the majority in Intermountain dutifully cited Brand X, it paid insufficient attention to the Supreme Court's specific instruction that "A court's prior judicial construction * * * trumps an agency construction * * * only if the prior *400 court decision holds that its construction follows from the unambiguous terms of the statute". Brand X, 545 U.S. at 982 (emphasis added). Judge Wherry reads Brand X to allow a subsequent regulation to trump the holding of a case "only if an 'unwise judicial construction' represents a policy choice". Majority op. p. 35. This seems to be a unique reading of Brand X, which distinguishes between statutes that the courts have found ambiguous and those they have found unambiguous, see Brand X, 545 U.S. at 982, not between cases where judges self-consciously *84 make policy choices and cases where they engage in the more pedestrian work of construing a statute's terms.

The appropriate focus of any application of Brand X is the prior opinion's holding, specifically whether it held that its interpretation of a provision "[followed] from the unambiguous terms of the statute". ⁵ That, in turn, raises two questions: (1) what exactly did the earlier court assert? and (2) does its assertion carry authority? "The first inquiry seeks meaning and asks: did this court assert that its interpretation was the only reasonable one? The second seeks authority and asks: was this assertion part of the case's holding?" ⁶ Both inquiries must yield positive answers in order for a court applying Brand X to find a step one holding.

Colony is a pre-Chevron case, and the Supreme Court did not have to decide whether its interpretation of the statute was the only reasonable one (i.e., that the statute was unambiguous, or clear) or merely the best one. The first inquiry, seeking meaning, is, for that reason, problematic when applied to Colony. *85 It is even more so for us, a national, trial-level Court, because the Supreme Court has not spoken clearly on the issue of legislative history in the Chevron framework and the situation in the Courts of Appeals is muddled. See Intermountain, 134 T.C. at 232-236 (Halpern and Holmes, JJ., concurring in the result). Brand X signals an agency-deferential approach to statutory interpretation. Given the difficulties in trying to reclassify Colony within the Chevron framework, we too would be inclined to require either an explicit statement that the predecessor statute ⁷*401 was unambiguous or a holding dependent on such unambiguity, ⁸ before declining to give deference to the Secretary's contrary regulations. ^9*86 We do not find either inColony and, thus, if called upon to do so, would not find it a Chevron step one holding. ¹⁰

Supplementing our analysis in Intermountain, Judge Wherry addresses the contingency that we may have been wrong there in deciding that Colony is a Chevron step one holding. Even if it is not, he says, the Supreme Court's decision in Chenery would still invalidate the final regulations. Majority op. pp. 38-39. In Bakersfield Energy Partners, LP v. Commissioner, 568 F.3d 767, 778 (9th Cir. 2009), affg. 128 T.C. 207 (2007), the Court of Appeals for the Ninth Circuit implicitly brought into question Colony's standing as a Chevron step one holding by suggesting that the Secretary may have authority to reinterpret *87 the phrase "omits from gross income". Barring written stipulation to the contrary, this case is appealable to the Court of Appeals for the Ninth Circuit. See sec. 7482(b)(1)(E), (2). Understandably, Judge Wherry may wish to be heard on that question. Unfortunately, his contribution--his conclusion that Chenery requires the Secretary to "unequivocally" repudiate Colony in his regulations, majority op. p. 41--will, if mistaken for the position of the Court, likely only cause us more trouble in our already nettlesome relationship with the Administrative Procedure Act (APA), 5 U.S.C. secs. 551-559, 701-706 (2006).

The problem is that the APA itself requires no "unequivocal" statement; it requires only "a concise general *402 statement of * * * [the regulations'] basis and purpose." 5 U.S.C. sec. 553(c) (emphasis added). ^11*88

The Secretary did explain his basis for the final regulations. He recognized authority for his substantive view of a broad, general definition of gross income. T.D. 9511, 2011-6 I.R.B. 455, 456 ("outside of the trade-or-business context * * * the section 61 definition of gross income applies"). He referenced sections 7805 and 6230(k) as his authority for issuing the final regulations. Id. He disagreed with our holding in Intermountain that the Supreme Court's interpretation of the statutory phrase in question ("omits from gross income") in Colony was the only permissible interpretation, and, on the basis of that disagreement, he relied on Brand X as his authority for superseding that interpretation. Id., 2011-6 I.R.B. at 455.

The Secretary also made his purposes clear: To supersede the, in his view, erroneous view of the Courts of Appeals for the Ninth and Federal Circuits that Colony is not limited to the trade or business context under the predecessor of section 6501(e)(1), id., and to address Intermountain's holding that the Supreme Court's interpretation in Colony is the only permissible *89 interpretation of the statutory language ("omits from gross income") in sections 6229(c)(2) and 6501(e)(1)(A), id.

While Judge Wherry recognizes the Secretary's dual purposes of (1) limiting Colony to a trade or business circumstance and (2) failing that, establishing his authority under Brand X to supersede the Supreme Court's interpretation of the phrase "omits from gross income", he finds neither adequate. Majority op. pp. 14-15. The first, he believes, attempts to usurp the courts' function of interpreting the Supreme Court's opinions. We agree. See Bakersfield Energy Partners, LP v. Commissioner, supra.The second, he believes, is fatally equivocal, principally because of the preamble's reference to "a new statutory setting." Majority op. p. 40. For him, that is an unacceptable ambiguity: does the Secretary really mean he can trump the Supreme Court's interpretation in Colony*403 or is he reiterating his view that Colony is confined to the 1939 Code? Until the Secretary unequivocally takes the former position, Chenery, according to Judge Wherry, ties the Secretary's hands. Majority op. p. 41. We do not agree.

First, it must be kept in mind that the Secretary's reference to a new statutory *90 setting arises only in the context of his rebuttal of our holding in Intermountain that the Supreme Court's opinion in Colony was the only permissible interpretation of the statute. Following the Secretary's recital of the Supreme Court's statement in Colony that the term "omits from gross income" is ambiguous, which he states "meaning * * * susceptible to more than one reasonable interpretation", he references Brand X and states that the Secretary and the IRS are permitted to adopt another reasonable interpretation of the term, "particularly as it is used in a new statutory setting." T.D. 9511, 2011-6 I.R.B. at 455. The Secretary does not say, e.g., "because of" or "in light of" that new setting. It seems to us that he was merely addressing what he saw as a flaw in our Intermountain analysis; viz, that the meaning the Supreme Court attached to the phrase "omission from income" in the 1939 Code necessarily attached to the same phrase in the 1954 Code. Tellingly, after stating his disagreement with Intermountain, the Secretary drives home his right to challenge it by citation: "See Hernandez-Carrera v. Carlson, 547 F.3d 1237 (10th Cir. 2008) (agencies are free to promulgate a reasonable *91 construction of an ambiguous statute that contradicts any court's interpretation, even the Supreme Court's)." Id., 2011-6 C.B. at 455-456. Why cite language of the, at the time, ¹² only Federal appellate-level decision applying Brand X to a Supreme Court interpretation other than to try to overturn a Supreme Court interpretation?

Moreover, neither Chenery nor the APA requires crystal clarity of purpose. We think that it is reasonably clear from the preamble to the final regulations that the Secretary believes that, relying on Brand X, he can come to a different conclusion as to the meaning of section 6501 than the Supreme Court did in Colony. And despite Judge Wherry's assertions to the contrary, Chenery asks no more. He is right *404 that under APA section 706(2)(A) the Secretary's findings cannot be arbitrary and capricious, majority op. p. 26, and we recognize that under that standard "the agency must examine *92 the relevant data and articulate a satisfactory explanation for its action", Motor Vehicle Manufacturers Association of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983) (emphasis added). And although a court cannot provide a reasoned basis for the Secretary's decision if he did not, see id. (citing Chenery), a court must "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Id. (quotation marks omitted); see also Providence Yakima Med. Ctr. v. Sebelius, 611 F.3d 1181, 1190 (9th Cir. 2010). The Secretary's Brand X rationale meets that standard, and that is enough. See, e.g., Nw. Ecosystem Alliance v. U.S. Fish & Wildlife Serv., 475 F.3d 1136, 1146 (9th Cir. 2007) (though not "a paragon of clarity * * *, the Service's reasoning can be discerned with careful reading."); Dominion Res., Inc. v. United States, 97 Fed. Cl. 239, 259, 2011 U.S. Claims LEXIS 212, *69 (2011)) (the Secretary's path could "be 'discerned,' albeit somewhat murkily"). We have no call to require more than that, with reasonable effort, the Secretary's intent can be discerned. See Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 543-544, 548, 98 S. Ct. 1197, 55 L. Ed. 2d 460 (1978)*93 (absent extremely compelling circumstances, courts should not overturn agency decisions when the statutory minimums have been met).

Finally, we recognize that, having accepted Judge Wherry's criticism of the Secretary's first rationale (limiting Colony) and rejected his criticism of the second (reliance on Brand X), we are left with a mixed basket of correct and incorrect rationales for an agency's decision, which might provide sufficient reason for a court to invalidate the agency's action. E.g., Intl. Union, UMW v. U.S. Dept. of Labor, 358 F.3d 40, 44-45, 360 U.S. App. D.C. 113 (D.C. Cir. 2004). But "[w]hen an agency relies on multiple grounds for its decision, some of which are invalid, * * * [we] may nonetheless sustain the decision as long as one is valid and the agency would clearly have acted on that ground even if the other were unavailable." Casino Airlines, Inc. v. NTSB, 439 F.3d 715, 717, 370 U.S. App. D.C. 88 (D.C. Cir. 2006) (internal quotation marks omitted); see also Fed. Express Corp. v. Mineta, 373 F.3d 112, 118, 362 U.S. App. D.C. 103 (D.C. Cir. 2004) ("No principle of administrative law or common sense requires us to remand *405 a case in quest of a perfect opinion unless there is reason to believe that the remand might lead to a different *94 result." (internal quotation marks omitted)). ¹³ Because we believe that the Secretary's second rationale is independent of his first, we believe that he would stand behind his regulations on that ground alone.

We have made clear that we would not characterize Colony as a Chevron step one holding. If called upon to do so, we would also find Chenery inapplicable. Nonetheless, since the temporary regulations are invalid per *95 Intermountain, we have to concur with the Court's disposition of petitioner's motion for summary judgment.

THORNTON, J., concurring: This Court's prior decisions, beginning with Bakersfield Energy Partners, LP v. Commissioner, 128 T.C. 207 (2007), affd. 568 F.3d 767 (9th Cir. 2009), have consistently held, relying on Colony, Inc. v. Commissioner, 357 U.S. 28, 78 S. Ct. 1033, 2 L. Ed. 2d 1119, 1958-2 C.B. 1005 (1958), that its construction of section 6501(e)(1)(A) follows from the unambiguous terms of the statute. Moreover, our decision in Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. 211 (2010), accords with decisions of the Courts of Appeals for the Fourth and Fifth Circuits rendered after Mayo Found. v. United States, 562 U.S.    , 131 S. Ct. 704, 178 L. Ed. 2d 588 (2011). See Burks v. United States, 633 F.3d 347 (5th Cir. 2011); Home Concrete & Supply, LLC v. United States, 634 F.3d 249 (4th Cir. 2011). The Courts of Appeals for the Federal and Seventh Circuits have rendered decisions to contrary effect. See Grapevine Imps., Ltd. v. United States, 636 F.3d 1368, 2011 U.S. App. LEXIS 4967 (Fed. Cir., Mar. 11, 2011); Beard v. Commissioner, 633 F.3d 616 (7th Cir. 2011), revg. T.C. Memo. 2009-184. Nevertheless, there is no *406 compelling reason for this Court to abandon *96 its precedents in this case, which is appealable to the Court of Appeals for the Ninth Circuit. That court has affirmed Bakersfield, although without addressing the final regulations, which had not then been issued. Presumably that Court of Appeals and perhaps the Supreme Court will have future occasion to do so. But at least for now the prevailing opinion appropriately holds in this case that the regulations do not trump this Court's prior decisions. See Natl. Cable & Telecomms. Association v. Brand X Internet Servs., 545 U.S. 967, 984, 125 S. Ct. 2688, 162 L. Ed. 2d 820 (2005).

COHEN, HALPERN, HOLMES, and PARIS, JJ., agree with this concurring opinion.