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After being advised by his attorney that submission of tax
returns for the delinquent years would reduce his tax liability,
Mr. Espinosa filed returns for 1981, 1982, 1984, and 1985 on
November 3, 1993. (The record does not contain copies of returns
filed, if any, for years other than those upon which transferee
liability is based.) The 1981 return showed a total tax of
$118,932 but, after subtracting $60,098 for withheld tax and
$80,967 claimed on line 56 for “1981 estimated tax payments and
amount applied from 1980 return”, indicated that Mr. Espinosa was
entitled to a refund of $22,133. The 1982 return reflected a
total tax of $113,091 and, after subtraction of $63,015 for
withheld tax and $21,131 for the alleged overpayment carried over
from 1980 and unused in 1981 (the $1,002 discrepancy is not
explained by the record), a tax due of $28,945. For 1984, a
total tax of $36,386 less $31,217 for withholding resulted in an
amount owed of $5,169. Likewise, total tax of $28,782 minus
$13,511 for withholding led to tax liability of $15,271 for 1985.
The IRS did not issue notices of deficiency to Mr. Espinosa based
upon these returns.
Tax Liability of Petitioner
On July 17, 1997, the IRS mailed a notice of transferee
liability to petitioner in her capacity as trustee of the Laura
A. Loveland Trust and transferee of Mr. Espinosa’s Lidak stock.
The asserted liability of $73,500.50 equaled the fair market
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