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dispute. Pursuant to a court order, petitioners received a
distribution in 1993 from IWF in the amount of $206,000.
In order to gauge their Federal income tax liability for
1993, petitioners consulted with a certified public accountant,
Brian Ringler, who provided petitioners with his estimate of
their liability. Thereafter, in September 1993, petitioners made
an estimated tax payment in the amount of $30,000. In January
1994, petitioners made a second estimated tax payment in the
amount of $2,360.
In April 1994, petitioners received Schedule K-1, Partner’s
Share of Income, Credits, Deductions, etc., from IWF. The
Schedule K-1 revealed that petitioner’s distributive share of
partnership income was as follows:
Ordinary Income $262,045
Other Portfolio Income -85,000
Schedule E Activity Income 177,045
Interest (investment income) 45,581
Petitioners retained Brad Gillespie, a certified public
accountant, to prepare their Federal income tax return for 1993.
Relying on the aforementioned Schedule K-1 and other information,
Mr. Gillespie determined petitioners’ tax liability as follows:
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