John G. Goettee, Jr. and Marian Goettee - Page 20

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          D.  The Settlement Process - Petitioners’ Case                              
               On November 24, 1993, Rowland sent to petitioners the                  
          following settlement letter.                                                
               Dear Mr. and Mrs. Goettee:                                             
               This case has been referred to us by District Counsel in               
               Louisville, Kentucky, to offer you a settlement in your tax            
               shelter dispute concerning Thompson Equipment Associates.              
               Please consider this settlement in view of the Tax Court               
               decisions in Thomas J. Leger, T.C. Memo. 1987-146, Harris              
               Cashman, T.C. Memo. 1989-533, and Marvin Chupack, T.C. Memo.           
               The terms in offer of settlement are:                                  
                    1. 50% of cash investment is allowed as a loss in 1981;           
                    2. no investment tax credit (ITC) is allowed;                     
                    3. no other loss, deduction, or credit will be allowed;           
                    4. no negligence penalty under Section 6653(a) will be            
                    5. the overvaluation penalty, Section 6659, will be 20%           
                    of the ITC used;                                                  
                    6. no understatement penalty under Section 6661 will              
                    7. tax motivated interest under Section 6621(c) will              
                    apply to the entire deficiency.                                   
               There is no documentation in the file which substantiates              
               your actual cash investment in this tax shelter.  Please               
               forward copies of your cancelled checks verifying your cash            
               investment, within the next ten days.  After this                      
               verification is received, you will receive the computations            
               of the settlement offer, showing the tax effects if you                
               accept the offer.                                                      
               Please contact me if you have any questions or concerns.  A            
               return envelope is provided for your convenience.                      
               This was the first time petitioners received a settlement              
          offer from the Internal Revenue Service.                                    

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