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reference to Finley Kumble on Schedule E of the 1992 return.
Petitioners did not file Form 8082 with respect to Finley Kumble
with their 1992 return or otherwise notify the Internal Revenue
Service that they were claiming that Mr. Blonien was not a
partner in Finley Kumble.
Petitioners’ 1992 return was prepared by their accountant,
Andrew Lundholm. Mr. Blonien did not know why he reported $2,000
of COD income of Finley Kumble, rather than the amount shown on
the Schedule K-1 from Finley Kumble.
Petitioners did report on Schedule E of their 1992 return
Mr. Blonien’s share of partnership income from Whitman & Ransom.
Petitioners did include with their 1992 return Form 8082 with
respect to Whitman & Ransom. Petitioners indicated thereon that
the amount shown on “Line 5 Guaranteed Payments to Partner” and
“Line 15a Net Earnings (loss) from self-employment” of the
Schedule K-1 received from Whitman & Ransom exceeded the amount
being reported by them on Schedule E, with the following
explanation: “Line 10 & 11 - Partnership reported items on an
accrual basis although it is a cash tax reporter Amount reported
on this return are [sic] amounts actually received.”
Petitioners’ accountant, Mr. Lundholm, sent a letter to
respondent dated July 21, 1995, requesting respondent to abate
late-filing penalties assessed for 1990, 1991, and 1992. In the
letter, Mr. Lundholm stated:
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