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interest in this entity. They reported a $951 section 1231 gain
from Shelter Associates III on their joint return for 1984.4
Petitioner and Mr. Hopkins’s reported income for 1980
through 1984 was significantly offset by partnership losses,5 a
casualty loss, and net operating loss (NOL) carrybacks and
carryforwards that they claimed as deductions.
Petitioner and Mr. Hopkins claimed deductions on their joint
returns for 1982 and 1983 which related to Far West Drilling
partnership.6 The Far West Drilling partnership deductions were
attributable to Mr. Hopkins’s investment in that partnership.
The deductions related to the Far West Drilling partnership were
erroneous. Petitioner and Mr. Hopkins signed a closing agreement
under section 7121 in which they agreed to adjustments to the Far
West Drilling partnership deductions. In a separate opinion,
Hopkins v. Commissioner, 120 T.C. ___ (2003), we held that
4A Schedule K-1, Partner’s Share of Income, Credits,
Deductions, etc., for 1984 reports petitioner as a partner in
Shelter Associates III.
5Petitioner and Mr. Hopkins deducted substantial losses from
various partnership activities on their 1980, 1982, and 1983
joint income tax returns: The first page of each of the 1980,
1982, and 1983 joint returns showed losses on Schedule E,
Supplemental Income and Loss, of $119,408, $88,383, and $26,844,
respectively. The partnership activities included Circle T
Racing Stable, Shelter Associates III, San Sierra Investment #11,
ECC Leveraged Drilling #3, and Far West Drilling.
6They claimed a loss deduction of $83,402 on their joint
return for 1982. They claimed a loss deduction of $91,086 and a
depletion deduction of $2,126 on their joint return for 1983.
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