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In notices of deficiency, dated November 4, 1988, respondent
disallowed petitioners’ claimed losses and tax credits that
related to their investment in SAB. Respondent also determined
that petitioners were liable for additions to tax under sections
6651(a), 6653(a), and 6659, and increased interest under section
6621(c).
Procedural Background
In response to the notices of deficiency, petitioners filed
a petition with this Court on January 23, 1989. In their
petition, petitioners claimed that they were not liable for
additions to tax under section 6653 because “[the] calculation of
their income tax liability for the years 1981, 1979, and 1978 and
their reporting of income for those years was in no way
negligent.” Petitioners did not mention or suggest in their
petition the argument that they were not granted equality of
treatment as a ground for contesting the addition to tax for
negligence.
On March 21, 1994, petitioners filed a motion for leave to
amend petition. On this occasion, respondent did not object, and
petitioners’ motion was granted. In their amended petition,
petitioners claimed that respondent was barred under section 6501
from assessing deficiencies for 1978 and 1979.
On April 1, 1994, we partially tried petitioners’ case. At
the trial, the parties submitted a Stipulation of Settled Issues.
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