- 95 -
1979 1980 1981 Total
Tax deficiency 0 $34,425 $30,000 $64,425
Interest 0 35,275 24,270 59,545
0 69,700 54,270 123,970
As you can see, this amounts to a substantial
reduction in tax liabilities.
4. Jack correctly understands that his recent
payment of $59,545 was entirely applied to interest.
5. The IRS is willing to settle with Jack only on
the basis that his test case remains active. The terms
are not contingent upon any specific testimony or
degree of cooperation and will be filed upon completion
of the test case. Jack need only testify, at the trial
and is only technically a defendant. Unless some
dramatic changes in schedule occur, there will be no
depositions. Essentially, Jack need only testify, be
protected from Kersting, and does not need to prepare a
full-blown defense.
6. As indicated, the IRS insists upon Jack
continuing as a test case defendant for its own
purposes. That is presently a condition of the
settlement. In addition, we simply do not trust
Kersting to act in accordance with his promises and
staying in the case appears to be wise insurance to
obtain cancellation of the notes, etc.
7. I enclose a copy of a letter we have sent to
Kersting's attorney regarding the notes issue for your
information.
8. If we are unable to obtain a cancellation of
notes and recovery of funds invested for Jack through
negotiation, we will certainly look to retain John
Chanin or other local counsel for that purpose.
On February 6, 1987, Mr. Huestis reviewed Mr. DeCastro's letter
with Mr. Thompson and was satisfied that Mr. Thompson understood
the status of his case.
On March 13, 1987, following the Maui session, Mr. McWade
sent Mr. DeCastro a revised decision for docket No. 31236-84
reducing the Thompsons' tax deficiency for 1980 from $34,425 to
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