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issued a delinquency penalty notice to petitioners concerning
their 1987 return. Petitioners paid without protest the amount
shown on the notice.
Petitioners requested and received extensions to
October 15, 1989, to file their 1988 income tax return.
Petitioners included a $20,000 payment with their original
request for extension. IRS records do not indicate that
petitioners received an additional extension of time to file
their 1988 return.
Beginning in March 1990, Mr. Hanna was involved in
litigation with his former business partner. Due to the pending
litigation, Mr. Hanna was denied access to his tax records that
were located on the premises of his former business office.
On April 16, 1990, petitioners sent an additional $25,000
check on their 1988 tax liability to the IRS. Petitioners
stopped payment on the check, however, based on a District Court
order (court order) related to the litigation. Petitioners’ 1988
return was filed on October 17, 1990, and did not have attached
an original extension request. Petitioners' 1988 return reported
adjusted gross income of $254,374.46 and indicated additional
taxes owed of $21,513.99.
Petitioners also requested and were granted an extension to
October 15, 1990, to file petitioners’ 1989 return. Petitioners
sent a check in the amount of $25,000 with the initial
application for extension, but Mr. Hanna stopped payment on the
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