Thomas H. and Maureen Hesse - Page 6

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          At the bottom of the letter, under the heading "Reason for                  
          Disallowance", the following sentence was hand-written: "To the             
          extent verified, the expenses are allowable as start-up costs and           
          must be capitalized."                                                       
               The IRS letter dated November 21, 1996, was mailed to                  
          petitioners in an envelope bearing a postmark date of November              
          27, 1996.                                                                   
               The IRS letter dated November 21, 1996, was mailed to                  
          petitioners approximately 2 weeks after the 90th day after the              
          notice of deficiency was sent to petitioners.4  In other words,             
          when petitioners received the IRS letter dated November 21, 1996,           
          and, indeed, on the date on which such letter was generated, the            
          90-day period within which petitioners could have filed a                   
          petition in respect of the notice of deficiency had expired.                
               Because petitioners believed that the notice of deficiency             
          had been rescinded, they regarded the IRS letter dated November             
          21, 1996, as a second notice of deficiency.  In view of the fact            
          that further consideration of their 1993 income tax return had              
          not led to an administrative resolution of their case,                      
          petitioners then filed a petition with this Court.  Such petition           
          was mailed to the Court on February 20, 1997, and was filed by              
          the Court on February 24, 1997.  The latter two days; i.e.,                 


          4 The 90th day after the notice of deficiency was sent to                   
          petitioners was Tues., Nov. 12, 1996.                                       




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