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adjustments.5 Disputing the $67,972.50 figure used in the notice
of deficiency, the petition includes an allegation that the
interest deduction reported on petitioners' 1978 income tax
return attributable to their participation in Kersting programs
was only $38,523.6 In addition, the petition includes an
allegation that the notice of deficiency issued to petitioners is
arbitrary and capricious.
On September 13, 1982, respondent filed an answer to the
petition. Specifically, respondent denied for lack of sufficient
information the allegation respecting the specific amount of the
interest deduction reported on petitioners' 1978 tax return and
denied without qualification the allegation that the notice of
deficiency is arbitrary and capricious.
On January 27, 1987, Luis C. DeCastro, Esq. (Mr. DeCastro),
filed an entry of appearance on behalf of petitioners in docket
No. 17445-82. In the interim, on December 23, 1986, respondent's
counsel assigned to the Kersting project, Kenneth McWade, Esq.
(Mr. McWade), had mailed Mr. DeCastro a letter enclosing proposed
decision documents for petitioners and several of his other
clients with cases before the Court involving Kersting-related
5 Petitioners resided in Woodland Hills, California, at the
time the petition was filed.
6 The petition identifies the payees as Atlas Funding
Corp., Fargo Acceptance Corp., Federated Finance Co., Forbes
Acceptance Corp., and Mahalo Acceptance Corp.
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