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hearing, and the Court concludes that a hearing is not necessary
for the proper disposition of this motion.
On their jointly filed 1994 Federal income tax return,
petitioners reported $57,285 as a taxable distribution from an
individual retirement account (IRA). For petitioners' 1994 tax
year respondent received a Form 1099-R from American Express
Trust Co. (American Express) reporting that petitioners had
received a gross distribution of $156,931.
On January 6, 1997, respondent mailed a 30-day letter (Tax
Notice CP-2000) to petitioners. A copy of the letter was sent to
William A. Neilson (Mr. Neilson) as attorney for petitioners.
The letter stated that respondent proposed to increase
petitioners' taxable income by $165,211. The proposed increase
produced an additional tax liability of $57,671. In addition,
the letter proposed an accuracy-related penalty of $11,534. The
letter stated that if petitioners did not respond within 30 days
respondent would issue a notice of deficiency. The letter
further stated that if petitioners did not agree with
respondent's proposed changes, petitioners should submit a signed
statement of explanation and include any supporting
documentation. Petitioners did not respond to the 30-day letter.
On May 9, 1997, respondent mailed the notice of deficiency
determining a deficiency in petitioners' 1994 Federal income tax
in the amount of $57,671 and an accuracy-related penalty under
section 6662(a) and (d) in the amount of $11,534. Petitioners
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