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Notices of Deficiency
Separate notices of deficiency were mailed to petitioner, the
trust, and the estate. The “Explanation of Items” attached to each
of the notices stated:
Recovery of Prior Deduction
Per return $ -0-
As Corrected 2,290,469
Adjustment 2,290,469
Since you, and/or pass-through entities of which you are
beneficiary, recovered an amount deducted in a prior
year, we included it in your income. Under the tax-
benefit rule and pursuant to the duty of consistency,
this amount is income to you. In accordance with
Internal Revenue Code section 61 income from whatever
source is taxable.
Interest Income from IRS
Per return $2,866,927
As Corrected 2,908,823
Adjustment 41,896
Since you, and/or pass-through entities of which you are
a beneficiary, received interest income on a refund from
the Internal Revenue Service, we have included the amount
shown in your income.
Each notice also determined a section 6651(a) addition to tax.
ULTIMATE FINDINGS OF FACT
1. In 1992, petitioner received a refund of $2,290,469 in
interest that she had deducted as interest expense on her 1988
amended return.
2. Petitioner had reasonable cause for the late filing of
her 1992 Federal income tax return.
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Last modified: May 25, 2011