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David P. Rhoades & Associates, Inc. (Rhoades report). In the
spring of 1995, Marc Samuelson (Mr. Samuelson), an estate tax
attorney for the Internal Revenue Service (IRS), began an audit
of the return.
On June 26, 1995, an IRS engineer issued a review report
concluding that the values before discounts determined in the
Rhoades report were acceptable, but the amounts of the discounts
claimed were unacceptable. Mr. Samuelson made a settlement
proposal to petitioner, but petitioner rejected it. On October
10, 1995, Mr. Samuelson told petitioner’s counsel that respondent
would not be relying on the IRS engineer’s report and respondent
would be hiring an appraiser to value the properties. He
informed petitioner’s counsel that this process would take at
least 3 months, and he would contact counsel when the expert was
hired.
On November 14, 1995, petitioner filed a supplemental estate
tax return (the supplemental return) with respondent’s Ogden
Service Center claiming an interest deduction. On December 14,
1995, the Ogden Service Center erroneously issued petitioner a
closing letter in response to the supplemental return. The
closing letter provided:
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Last modified: May 25, 2011