Tom I. Lincir and Diane C. Lincir - Page 4

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          requirements for deducting the losses in dispute because their                
          primary objective was to obtain tax benefits.  Petitioners                    
          entered into a second stipulation in which they agreed that all               
          transactions related to the FTI program would be ignored for                  
          Federal income tax purposes.                                                  
               Although petitioners made one partial payment of                         
          approximately $270,000 in 1990 against their liability for the                
          taxable years 1978 through 1982, the parties agree that                       
          petitioners have underpayments for those taxable years on which               
          interest continues to accrue.  The parties also agree that                    
          petitioners are entitled to refunds for outstanding overpayments              
          for the taxable years 1984 and 1985 attributable to the gains                 
          that petitioners reported in those years on transactions                      
          associated with the Merit Securities program.2                                
               After the disposition of the substantive tax shelter                     
          adjustments described above, the Court conducted a trial to                   
          redetermine petitioners' liability for additions to tax and                   
          section 6621(c) interest.  In Lincir v. Commissioner, T.C. Memo.              
          1999-98, the Court sustained respondent's determinations that                 
          petitioners are liable for various additions to tax (including                
          section 6653(a)(2) for 1981 and 1982) and section 6621(c)                     
          interest for the years in issue.  We subsequently ordered the                 

               2  On or about Apr. 7, 1987, to avoid a whipsaw in the event             
          the Court were to sustain respondent's disallowance of losses                 
          claimed in the taxable years before the Court, petitioners filed              
          protective claims for refunds of the taxes paid in 1984 and 1985              
          on the gains reported in those years.                                         

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