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section 6621 regarding additional interest would apply to that
taxable year. The letter went on to state as follows:
Section 6621(c) IRC
Since the underpayment of tax is attributable to a tax
motivated transaction, the interest to be applied to
any underpayment after 12-31-84 is 120% of the adjusted
rate of interest established under IRC Section 6621(c).
The amount of the underpayment attributable to the tax
motivated transactions is $96,583.00.
Thereafter, by Notice dated December 12, 1994, respondent
billed petitioners for additional interest under section 6621(c)
for the taxable year 1982 in the amount of $27,914. Petitioners
protested the assessment of additional interest without having
prior opportunity to contest the assessment; nevertheless, they
paid the $27,914 amount on December 27, 1994.
K. Collateral Litigation
In December 1988, a few months after petitioners amended
their income tax returns for 1982 through 1985, petitioner and
several of his medical colleagues commenced a civil action for
damages against Gordon, as well as Boylan & Evans, the law firm
that authored the tax opinion in the offering memorandum,12 in
respect of Dickinson and two other Plastics Recycling
partnerships. This action was settled by the parties thereto
11(...continued)
part of the record. Apparently, petitioners foresaw an adverse
outcome of a likely TEFRA partnership action and amended their
returns in order to satisfy anticipated underpayments of tax
attributable to the Dickinson investment.
12 See supra sec. “C.”.
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