Diane S. Blodgett - Page 8

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                    A lawsuit is currently pending in federal court, Case             
               98-49, and it has much key evidence proving my losses.  In             
               any case my entire ERISA Pension was alienated involving               
               more than $1,000,000 in losses to me personally, plus the              
               loss of all equity in my Minnesota homestead of more than              
               $300,000.  The ERISA and homestead losses alone more than              
               cover any taxes which would otherwise be due but were paid             
               already . . . please send me the refund requested.                     
                    Sincerely,                                                        
                    [signature]                                                       
                    Diane S. Blodgett                                                 
               P.S.  The State of Minnesota was a party to the contracts              
               . . . but has never honored them either . . .                          
               My rent is paid out of my earnings from teaching school.               

               Petitioner claimed deductions on her 1994, 1995, 1996, and             
          1997 returns that were similar in amount and nature to the loss             
          deduction claimed on the 1998 return.3  She claimed and received            
          refunds of her annual withholdings of $736.36 in 1996 and                   
          $2,722.78 in 1997.  The 1996 and 1997 returns also attached                 
          explanatory letters.  In the letter attached to the 1996 return,            
          petitioner alleged that the FTC stole the pension plan funds                
          worth $815,000 and claimed that the assets turned over to settle            




               3    On her 1994 return, petitioner reported a $3 million              
          capital loss and other losses of $5 million.  She explained the             
          losses on her 1994 return as “loss carry forward, no taxes owed.”           
          On her 1995 amended return, petitioner reported $3 million as a             
          business loss carryforward, $5 million as a capital loss                    
          carryforward, and $3 million as other losses.  She reported her             
          adjusted gross income as an $8 million loss carryforward.  On her           
          1996 return, petitioner claimed a $9 million capital loss                   
          carryforward and $38,046,524 as other losses.  On her 1997                  
          return, petitioner claimed a business loss carryforward of                  
          $41,046,524.                                                                



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