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Byron Stout, an employee at the processing division at the
Service Center. During this discussion Mr. Crabtree requested
that Mr. Stout forward the protest letter to respondent's Appeals
Office in Nashville, Tennessee.
Because the protest letter was not received by respondent's
examination division within the designated period, preparation of
the notices of deficiency began on March 3, 1994. Notices of
deficiency for years 1988 and 1991 were mailed to the Dugans on
March 22, 1994. In the notice of deficiency for 1991, the
passthrough loss attributable to NTI was disallowed upon the
ground that NTI's S corporation election was not effective until
January 1, 1993. The notice of deficiency for 1988 disallowed
the net operating loss carryback that was generated in 1991 by
the passthrough loss. The deficiency notices indicated that if
the Dugans took the position that NTI had timely filed a Form
2553 effective for 1991 they could provide as acceptable
verification: (1) A certified mail receipt reflecting that the
form was timely mailed; (2) a Form 2553 with date stamp
acknowledging receipt; or (3) an IRS letter stating that Form
2553 had been accepted. Prior to the issuance of the notices of
deficiency, respondent's administrative file did not disclose the
receipt of a request for an Appeals conference made by or on
behalf of the Dugans.
On June 10, 1994, Mr. Crabtree mailed a letter to respondent
requesting that the notices of deficiency be rescinded. In
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