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3. Petitioners' Valuation and Charitable Contribution Deductions
Petitioners used the services of an income tax return
preparer to prepare their 1985 income tax return. Petitioners
requested and obtained extensions to file until October 15, 1986.
The return was filed on October 13, 1986. At the behest of their
income tax return preparer, petitioners obtained two appraisals
of the collection, one from Sigmund Rothschild and another from
F. Peter Rose. The latter appraisal, for $188,085, was used as
the basis for a charitable contribution reported in petitioners'
1985 joint tax return. A copy of the report of that appraisal
was attached to the return. The amount of the charitable
contribution shown on the 1985 return was large enough to create
a claimed carryover into succeeding tax years through 1990.
Petitioners claimed that carryover in their 1986 through
1988 joint income tax returns.4 The parties executed a series of
4 Petitioners' charitable contribution deductions shown on
their returns for the years at issue were as follows:
Taxable Beginning Charitable Amount of
Year Balance Deduction Claimed Carryover
1985 $188,085 $20,885 $167,200
1986 167,200 20,808 146,392
1987 146,392 21,763 124,629
1988 124,629 21,859 102,770
Except for an additional $162 not at issue, the charitable
contribution deduction claimed for each year in issue is also the
adjustment to income that formed the basis for the underpayment
determined by respondent in the statutory notice of deficiency
(continued...)
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