9
before the United States Tax Court as referenced above.
Although the balance of the Compliance Center letter is
correct, I want to clarify the terms of the settlement,
as well as the manner and time-frame for accepting the
settlement.
First, the settlement offer that you received may
appear confusing at first glance because it is embodied
in a schedule of partnership adjustments. The bottom
line of the settlement offer, however, is that all of
the items reflected on your income tax returns for the
taxable years 1983 and 1984 which flow from your
interest in Valley Cable, Ltd. will be removed from
those returns. You will be allowed an ordinary
deduction in 1983 equal to your partnership percentage
of 1/2 of the total cash invested in the partnership as
determined at the partnership level.
Second, the settlement offer also contains certain
concessions by the government with respect to the
penalties which have been recommended by the
Examination Division in connection with your
participation in Valley Cable, Ltd. The penalties are
not at issue in the partnership proceeding but be
advised that the offer to settle them will expire at
the same time as the offer for the partnership items.
In due course, a statutory notice of deficiency will be
issued to you for the full amount of the recommended
penalties if you choose not to accept the government's
offer while it is available.
Third, the settlement offer can only be accepted
by you if you (and your spouse, if a joint return was
filed) execute the Form 870-L(AD), previously sent to
you by the Compliance Center, and forward it to Mr.
Peter Palka in an envelope postmarked no later than May
6, 1991, which date is the Final deadline for accepting
the offer. If the Form 870-L(AD) is altered in any
way, or if it is accompanied by a cover letter
containing any conditions to the settlement, it will be
considered a counter-offer and therefore a rejection of
the government's offer. Mr. Palka's address is Appeals
Division - I.R.S., 10850 Richmond Avenue, Suite 300,
Houston Texas 77042. The settlement agreement between
you and the government will be consummated only upon
the execution of the Form 870-L(AD) by an authorized
representative of the government.
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