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approximately 1,800 of Mr. Kersting's clients, and schedules
showing the amount of interest purportedly paid by each client to
one of several Kersting companies during the taxable years 1977,
1978, and 1979. The circumstances of the search of Mr.
Kersting's offices are described in the Court's opinion in Dixon
v. Commissioner, 90 T.C. 237 (1988) (Dixon I).
On April 15, 1982, respondent issued a joint notice of
deficiency to petitioners determining a deficiency in their
Federal income tax for 1978 in the amount of $47,580.75 and an
addition to tax under section 6653(a)3 in the amount of $2,379.4
The notice of deficiency, a form of notice apparently issued to a
number of taxpayers with Kersting-related adjustments, states
that respondent was disallowing $67,972.50 in interest deductions
that petitioners purportedly paid to any entity owned, associated
with, or controlled, either directly or indirectly, by Henry
Kersting.
3 Section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure.
4 The notice of deficiency was issued approximately 70 days
prior to the expiration of the normal 3-year period of
limitations applicable to the assessment of Federal income taxes.
Sec. 6501(a).
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