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Plan participants except for petitioner, to the profit-sharing
plan trust. First American then arranged for the remaining
assets, to which petitioner was entitled, to be transferred from
the Plan trust to GCI on August 18 and September 23, 1986.
During the summer 1986, respondent assigned GCI’s
application for a determination to an employee plans specialist.
During the period July 1986 through January 1987, the specialist
and GCI’s representatives corresponded concerning the
application. On or about March 31, 1987, the matter was
submitted internally within respondent’s office for technical
advice regarding the Plan’s termination. On June 9, 1988,
respondent’s national office issued a technical advice
memorandum, stating its position. On or about July 27, 1988, GCI
withdrew its application for a determination letter. Thereafter,
this issue was addressed in the examination of petitioner which
led to this controversy.
A closing conference was held on October 23, 1991, and it
was attended by petitioner, respondent’s agent, the agent’s
supervisor, and Mr. Zdonek. At this meeting, respondent’s agent
discussed the substantive issues and the reasons he believed that
a section 6661 penalty for substantial understatement should
apply. Mr. Zdonek told respondent’s agent that he believed this
penalty should not apply.
OPINION
Evidentiary Objections
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