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petitioner "became aware" that the Internal Revenue Service (IRS)
was disallowing deductions related to the partnership. Corman
suggested that petitioner confer with a tax attorney, which he
did.
On the basis of his discussions with his attorney,
petitioner developed "an understanding" that other taxpayers in
his locale who had invested in Mid Continent were settling their
controversies with the IRS. He understood that if they agreed to
forgo their partnership deductions, the IRS would allow Mid
Continent partners to deduct their "[cash] investment", such as
the $10,000 payment he had made.
The Partnership Examination and Petitioners' Amended Return
On August 11, 1986, respondent mailed petitioner a notice of
the beginning of an examination of Mid Continent’s 1983
partnership return.
On or about December 29, 1986, petitioners filed an amended
income tax return for 1983 (the amended return), along with a
Notice of Inconsistent Treatment or Amended Return on Form 8082.
Petitioners amended their 1983 return by reducing the $46,007
partnership loss with respect to Mid Continent by $36,007 and by
eliminating an investment tax credit in the amount of $190.
Petitioners remitted a total of $24,393 with the amended return,
designating $18,194 as tax and $6,199 as interest.
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