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In June 1991, respondent proposed a settlement for taxable
years 1983 and 1984 regarding petitioner’s investment in Mid
Continent. Petitioners rejected the proposed settlement on the
basis of the view that their tax liability was properly reported
on the amended return.
On October 21, 1991, respondent mailed separate notices of
final partnership administrative adjustment (FPAA’s) to Mid
Continent’s tax matters partner (TMP) for the taxable years 1983
and 1984. Respondent did not mail a copy of either of the FPAA’s
to petitioners. A timely petition for readjustment, which was
assigned docket No. 5757-92, was filed by partners other than the
TMP.
On February 11, 1993, a decision was entered by this Court
in the partnership proceeding. The decision served to sustain
respondent’s disallowance of the losses claimed by Mid Continent
on its partnership returns for 1983 and 1984. No appeal was
taken, and this Court’s decision became final on May 12, 1993.
Secs. 7481(a), 7483.
On December 27, 1993, respondent made an assessment against
petitioners, relating to the taxable year 1983, for additional
income tax in the amount of $5,000 and for unpaid interest in the
amount of $13,633.01 computed at the increased rate established
under section 6621(c). The tax assessed in the amount of $5,000
was based on the disallowance of the remaining $10,000
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