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deficiencies in the amounts of $48,366 and $101,879,
respectively, which reflect respondent's position that all of the
Partnership's losses for those years (including the losses
reported prior to the entry of the Decision) should be
recharacterized as passive losses in petitioners' hands, subject
to the limitations of section 469. On March 17, 1997, respondent
assessed the deficiencies for 1987 through 1990 arising from the
foregoing computational adjustments.
On March 7, 1997, respondent issued to petitioners affected
items notices of deficiency for 1987 and 1988 determining
additions to tax only, based on the computational adjustments for
those years. On March 14, 1997, respondent issued to petitioners
penalties-only affected items deficiency notices for 1989 and
1990, based on the computational adjustments for those years.
Based on information subsequently received from petitioners'
counsel, respondent abated the assessments for 1989 and 1990 and,
with petitioners' consent, attempted to rescind the related
penalties-only March 14, 1997, notices pursuant to section
6212(d). However, upon learning of respondent's intention to
issue new affected items notices of deficiency for 1989 and 1990
determining both deficiencies and penalties, petitioners revoked
their consent to rescind the March 14, 1997, notices in a letter
to respondent dated April 24, 1997. On May 1, 1997, petitioners
filed the petition herein.
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