Alice M. Beagles - Page 5

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               the claimed Partnership losses is a substantial                        
               underpayment attributable to tax motivated transactions                
               under Internal Revenue Code sec. 6621(c).  Accordingly,                
               the annual rate of interest payable on the taxpayer’s                  
               income tax for the taxable years 1983, 1984 and 1985                   
               shall be 120 percent of the adjusted rate established                  
               under Internal Revenue Code sec. 6621(b).  The 120                     
               percent interest rate applies to interest accruing                     
               after December 31, 1984.                                               
                    (6) The taxpayer is not liable for any additions                  
               to tax pursuant to I.R.C. secs. 6653(a)(1), 6653(a)(2),                
               or 6661(a) for the portion of the taxpayer’s                           
               deficiencies which are based on the disallowances  of                  
               the Partnership’s losses and credits in any taxable                    
                    (7) The taxpayer is not liable for any other                      
               penalties or additions to tax in any taxable year with                 
               respect to its interest.                                               
               On March 28, 2000, the IRS mailed a letter with enclosures             
          to the Beagles explaining how the adjustments that were made                
          during the examination of Wilshire West affected their individual           
          tax returns for 1983 and 1984.  On June 5, 2000, the IRS assessed           
          a deficiency of $4,432.53 for 1983 and $269.14 for 1984 against             
          the Beagles, resulting from the adjustments made to Wilshire West           
          that passed through to Jackson and then to the Beagles.  The                
          deficiencies resulted from disallowance of losses claimed by the            
          Beagles from Jackson in excess of $2,500.  The $2,500 amount was            
          allowed as a deduction in 1983 equal to one-half of the Beagles’            
          cash investment.                                                            
               On May 28, 2000, the Beagles requested abatement of the                
          interest of $22,770.39 that had accrued on their tax liability              
          for 1983 and 1984.  At that time, Robert Beagles was terminally             

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