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Offer to Waive Restrictions on Assessment and Collection of Tax
Deficiency and to Accept Overassessment, enclosed with the July
29 letter, KSCI was treated as an S corporation. The Form 870-AD
reflected adjustments to increase the taxable income of KSCI by
$48,864 and $49,092 for 1992 and 1993, respectively. Because
KSCI was treated as an S corporation, there was no tax imposed on
KSCI as a result of the adjustments.
The Form 870-AD reflected adjustments to increase the
taxable income of petitioner and his wife by $42,755 and $42,803
for 1992 and 1993, respectively. As a result of the increases in
taxable income, the Form 870-AD set forth increases in the Chans’
tax liabilities of $9,477 and $9,868 for the respective tax
years. On August 4, 1997, Mr. and Mrs. Chan executed the Form
870-AD.
On August 21, 1997, Mr. Peter sent a letter to petitioner
reciting approval of the settlement of examination changes. In
the Appeals Transmittal and Supporting statement, dated August
21, 1997, Mr. Peter explained that it was an error for the
examining agent to treat KSCI as a C corporation in the
examination. Mr. Peter concluded that KSCI was not a personal
holding company, and that absent evidence to the contrary,
petitioner would not be treated as having received constructive
dividends from KSCI in 1992 and 1993.
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Last modified: May 25, 2011