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During 1985 and 1986, petitioners were also partners in a
partnership entitled Hambrose Leasing 1985-4 (Hambrose). The
details of the structure of Hambrose and of petitioners'
percentage investment in Hambrose are not a part of the record,
but it appears that Hambrose was not a TEFRA partnership. On May
26, 1995, respondent issued notices of deficiency with respect to
petitioners' 1985 and 1986 Federal income tax returns determining
deficiencies in income taxes of $11,055 for 1985 and $25,573 for
1986, plus additions to tax under section 6653(a)(1)(A) and (B),
and section 6661(a) in connection with the adjustment of
petitioners' claimed losses attributable to Hambrose. In
addition, in the notices of deficiency respondent determined that
interest was to be computed under section 6621(c) at 120 percent
of normal rates.
A timely petition was filed with respect to the notices of
deficiency. However, petitioners attempted to place into issue
the deficiencies arising out of the adjustments made to their
1985 and 1986 returns in connection with their investment in
Nurseries. Respondent moved to dismiss that aspect of the case
for lack of jurisdiction and to strike all references in the
petition to Nurseries. Petitioners contend that they were never
notified about the examination and settlement of Nurseries and
they therefore deserve an opportunity to litigate the
deficiencies related to Nurseries. The resolution of this issue
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