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that their correct tax liability was $7,045, that they had paid
$107,771, and that they were entitled to a refund in the amount
of $100,726. Petitioners' claim that they had paid $107,771 in
tax for 1990 was incorrect.
Respondent did not accept petitioners' amended return. To
the contrary, respondent treated petitioners' amended return as a
claim for abatement with respect to $100,726 of the $107,771
amount that respondent had assessed on November 25, 1991.
On or about December 31, 1995, following an examination of
petitioners' tax liability for 1990, respondent issued a so-
called 30-day letter to petitioners proposing a deficiency in
their tax liability for 1990 in the amount of $321,079.
Specifically, respondent proposed to determine that petitioners
failed to report $1,139,425 of ordinary income attributable to
petitioners' investment in an S corporation known as GMF, Inc.
An examination report attached to the 30-day letter states:
On 1/13/93 you filed claim form 1040X or an
informal claim for an abatement of $100,726 for 1990.
As a result of our examination, we have disallowed your
claim. GMF, Inc. was owned by taxpayer in 1990 and was
an S corporation at that time. The Internal Revenue
Code has no provision for filing tax abatement claims.
If you do not agree with our determination, you may,
after paying the additional tax due, file an amended
return or claim for refund. There is no provision for
appealing this unless the original balance due is paid.
* * *
On April 15, 1996, and April 15, 1997, respondent applied
overpayment credits of $5,923.05 and $6,666.69 associated with
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