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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
years.
(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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