Theodore A. Pride - Page 3

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               Petitioner operated a dental practice as a professional                
          corporation.  From 1983 through 1995, the corporation was liable            
          for Federal employment taxes and corporate income taxes.                    
          Petitioner filed returns for the corporation, but he did not pay            
          the tax liabilities.  After the taxes were assessed,                        
          approximately $275,000 was collected by levy upon assets of the             
          corporation in the possession of third parties.                             
               Petitioner’s corporation filed a refund suit in the U.S.               
          District Court for the Eastern District of Pennsylvania, docket             
          No. 97-0762, contending that the excess of the moneys collected             
          by levies on corporate assets should have been applied to his               
          personal income tax liabilities or should be refunded.  The                 
          District Court appointed a certified public accountant as a                 
          “Special Master” to meet with the accountants for both parties in           
          an attempt to determine the correct amounts of assessment of                
          interest and penalties and payments with respect to the                     
          corporation’s tax liabilities.  In a Memorandum Opinion and Order           
          filed January 18, 2001, the District Court concluded that only              
          $331.50 was available to have been applied to petitioner’s                  
          personal income tax liabilities.  The District Court concluded              
          that the IRS properly accounted for all payments made by the                
          third parties, applying the payments first to the oldest                    
          liabilities of the corporation, and that penalties and interest             
          had appropriately accrued on the balances remaining.                        

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