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effective beginning January 1, 1991. The petition further
alleges that in April 1991 respondent sent a letter to NTI that
acknowledged receipt of the Form 2553 in March 1991 and requested
additional information with respect to it.
On or about July 6, 1994, Mr. Crabtree telephoned Connie
Hailey to discuss his request that the notices of deficiency be
rescinded. Ms. Hailey advised Mr. Crabtree that the deficiency
notices could not be rescinded because the Dugans had filed a
petition in this Court in response to the deficiency notices.
On August 12, 1994, respondent filed an answer to the
petition. In the answer, respondent, due to "lack of sufficient
knowledge or information", denied petitioner's allegations that a
Form 2553 had been filed by NTI in March 1991 electing S
corporation status effective January 1, 1991, and further denied
the existence of respondent's April 9, 1991, letter to NTI.
At an Appeals conference held on August 25, 1994, Mr.
Crabtree submitted affidavits from Mrs. Dugan and Ms. McMurray
and other undescribed documents in an attempt to prove that the
Form 2553 was first mailed by NTI and received by respondent
during March 1991. By letter dated March 29, 1995, Appeals
Officer Sue Loy informed Mr. Crabtree that she had concluded that
"Mrs. Dugan does not have proof of mailing the election".
However, after giving "consideration to the affidavits * * *
submitted", Ms. Loy proposed that the case be settled "with the
Government conceding that 50% of * * * [NTI's] loss for 1991 * *
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