David Bruce McMahan - Page 5

                                                - 5 -5                                                   
                  Beginning 2 to 3 weeks prior to August 15, 1983, Ms. Supino                         
            repeatedly reminded Mr. Russell about the upcoming deadline.  Mr.                         
            Russell assured her each time that he would file the appropriate                          
            forms.  During this time period, petitioner asked Mr. Russell                             
            whether the return was ready to be filed.  Mr. Russell informed                           
            petitioner that it was not ready to be filed but that he believed                         
            the Service would grant a second extension.  Petitioner was aware                         
            that such extensions were not automatic.                                                  
                  During the week prior to August 15, 1983, petitioner asked                          
            Mr. Russell about the status of his 1982 return.  Mr. Russell                             
            told him that he had filed the second extension request.  Mr.                             
            Russell also assured Ms. Supino that he had filed it, and she                             
            informed petitioner.  After receiving these assurances,                                   
            petitioner went on vacation.  When he returned in September,                              
            however, he discovered that the second extension request had not                          
            been filed.                                                                               
                  On March 14, 1984, OAD filed petitioner's 1982 individual                           
            income tax return.  The return reported a tax liability of                                
            $86,252 and an overpayment of $273,748.5  Petitioner filed an                             
            amended return dated May 1, 1984, that reported a net increase in                         
            taxable income of $399,364 and a corresponding new tax liability                          
            of $154,596.  On February 12, 1987, respondent issued a notice of                         

            5Petitioner had paid $360,000 with the application for the                                
            first extension.  Since the total tax liability was only $86,252,                         
            the overpayment was calculated as follows:  $360,000 - $86,252 =                          
            $273,748.                                                                                 




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