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partners in total. Petitioners were notified by respondent on
May 9, 1988, that an examination of Green Leasing was underway
with respect to taxable year 1984.
From August 1990 through November 1991, petitioners received
several items of correspondence from CIGNA explaining the status
of respondent’s ongoing examination of Green Leasing and the
other partnerships. This correspondence incorporated analysis by
the accounting firm Coopers & Lybrand. The first letter
petitioners received, dated August 22, 1990, described a “worst
case” outcome to settlement negotiations. The letter
specifically stated that negotiations were ongoing and that
petitioners should not expect any eventual settlement offer to
contain the same terms.
Petitioners filed amended Federal income tax returns for the
taxable years 1983 through 1987 in December 1990 and for the
taxable years 1988 and 1989 in January 1991. They paid the
additional tax and interest shown thereon at the time they filed
the amended returns. The IRS processed the amended returns
reporting tax due (1983 through 1985) and assessed the reported
tax. The IRS did not process those showing refunds (1986 through
1989) because of the unresolved issues relating to Madison
Leasing. Petitioners filed the amended returns partially in
response to this Court’s opinion in Thornock v. Commissioner, 94
T.C. 439 (1990).
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