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assume the IRS had closed the Blue Gem case without adjusting
Blue Gem’s 1982 and 1983 returns, thus confirming that the Blue
Gem coal mining venture was a legitimate investment.
On March 24, 1997, the IRS made an assessment against
petitioners of tax and interest attributable to the disallowance
of Mr. Leffert’s distributive share of Blue Gem losses for 1982
and 1983.
On April 3, 1997, the IRS sent a letter to Mr. Leffert
responding to his March 9, 1997, letter. Though disagreeing with
Mr. Leffert’s claim that there had been an inordinate delay, the
IRS advised him that he could file a Form 843, Claim for Refund
and Request for Abatement, if he wished to dispute the interest
assessed against him. The letter further advised Mr. Leffert
that his request for abatement would be denied by the Service
Center but that he could appeal that decision administratively.
On April 16, 1997, Mr. Leffert sent a letter to the IRS
reiterating that he had never received notice of the IRS’s
decision concerning his earlier protest letter until about March
1997, when he had received the Forms 4549-A. He asked that some
compromise be made allowing petitioners to pay interest only
through December 31, 1988.
On August 11, 1997, petitioners filed their request for
abatement of interest for 1982 and 1983. Their Form 843 stated
in pertinent part:
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