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underlying tax liabilities are no longer in dispute.1 The sole
issue for decision is whether respondent’s decision that formed
the basis for the Notice of Determination was an abuse of
discretion. Unless otherwise indicated, all section references
are to the Internal Revenue Code in effect at all relevant times.
This case was submitted fully stipulated, and the facts are
so found. The stipulations of the parties, with accompanying
exhibits, are incorporated herein by this reference.
Background
At the time the petition was filed in this case, petitioners
resided in Virginia Beach, Virginia.
Petitioner Edward H. Harrell filed for chapter 11 bankruptcy
on October 24, 1995. Petitioner Anne G. Harrell filed for
chapter 11 bankruptcy on December 18, 1996. Petitioners’ chapter
11 bankruptcy cases were consolidated on February 27, 1997.
Their consolidated chapter 11 bankruptcy case was dismissed on
June 30, 1997.
1In Young v. United States, 535 U.S. 43 (2002), the Supreme
Court resolved the question whether tax liabilities in a posture
similar to those of petitioners for tax years 1991-93 could be
discharged in a bankruptcy proceeding. The Supreme Court held
that the 3-year lookback period contained in 11 U.S.C. sec.
507(a)(8)(A)(i) (2000) of the Bankruptcy Code is subject to
equitable tolling during the pendency of a prior bankruptcy
petition. Following the holding of that case, petitioners no
longer argue that their income tax liabilities for tax years
1991-93 were discharged as a result of their bankruptcy
proceeding.
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