Douglas A. Vander Heide and Janet Vander Heide - Page 3

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          attributable to partnership items.  See sec. 6225(a).                       
          Petitioners did not file a statement denying the settlement                 
          authority of Nurseries' TMP under section 6224(c)(3)(B) at least            
          30 days prior to the date on which the settlement agreement was             
          entered into by the Commissioner and Nurseries' TMP.  See section           
          301.6224(c)-1T(a)(2), Temporary Proced. & Admin. Regs., 52 Fed.             
          Reg. 6786 (Mar. 5, 1987).  Indeed, at that time, petitioners were           
          unaware of the partnership proceeding.                                      
               By letters dated June 14, 1993, and August 9, 1993,                    
          petitioners were advised by respondent of changes made to their             
          1985 and 1986 joint Federal income tax returns as a result of the           
          settlement of the partnership items of Nurseries as they flowed             
          through to petitioners' 1985 and 1986 returns.  The computation             
          form attached to the letter for 1985 reflected that petitioners'            
          claimed ordinary loss of $74,978 with respect to Nurseries was              
          disallowed except for a $25,000 settlement allowance, that a                
          deficiency was computed in the amount of $18,429, that no                   
          additions or penalties were being asserted, but that interest was           
          to be computed at 120 percent of the normal rates pursuant to               
          section 6621(c).  Similarly for 1986, the petitioners' claimed              
          loss for Nurseries of $11,309 was disallowed resulting in a                 
          deficiency of $9,995.  These deficiencies and appropriate                   
          interest were subsequently assessed, and petitioners began making           
          arrangements to pay them.                                                   





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