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income of $50,498 ($11,975 per the return and $38,523
disallowed Kersting deductions) is $15,709, which
produces a deficiency of $12,214 ($15,709 less the
$3,495 reported on the return). A seven percent
reduction of this deficiency results in a deficiency of
$11,359, far less than the deficiency in the decision
of $23,000.
The explanation for this discrepancy lies in the
fact that several Kersting participants received
notices of deficiency based on a reconstruction of
records obtained from Mr. Kersting's office in 1981.
For the year 1978, the statute of limitations would
have expired in 1982. Thus, the notice may have been
issued without access to the original return. Whatever
the reason for the discrepancy, it is clear that the
Richards did not receive any kind [of] special
treatment from Mr. McWade.
On November 8, 1996, Mr. Jones filed an entry of appearance
on behalf of petitioners and a Motion for Leave To File Motion To
Vacate Decision (motion for leave). On that same date, the Court
lodged petitioners' Motion To Vacate Decision and Set Aside
Settlement and petitioners' Memorandum of Points and Authorities.
Petitioners' Motion To Vacate Decision was based upon the theory
that the notice of deficiency issued to petitioners was invalid
under Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987), revg.
81 T.C. 855 (1983), and, therefore, the Court lacked jurisdiction
to enter the stipulated decision in their case.
On November 14, 1996, the Court issued a Notice of Filing
directing respondent to file an objection, if any, to
petitioners' motion for leave on or before December 5, 1996.
On November 29, 1996, respondent filed a Motion to Extend Time To
File Respondent's Objection to petitioners' motion for leave. In
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