William B. Berry and Marjorie S. Berry - Page 3




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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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