John M. Mekulsia - Page 15

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          1986       4-15-1987    3-26-2001        34,547.54                          
          1987       4-15-1988    3-26-2001            14.91                          
          As a result of petitioner’s making a deposit in the nature of a             
          cash bond in the amount of $197,000 on March 26, 2001, respondent           
          stopped interest from accruing on that date.                                
          G.  Petitioner’s Interest Abatement Claim                                   
               On June 3, 1998, petitioner initiated correspondence with              
          respondent requesting an explanation for respondent’s imposing              
          interest relating to a tax-motivated transaction pursuant to                
          section 6621(c).  More specifically, petitioner wanted respondent           
          to provide his basis for determining that petitioner’s investment           
          in SGE was a tax-motivated transaction.  Respondent treated this            
          letter as an informal claim for interest abatement.                         
               On June 22, 1998, respondent denied petitioner’s informal              
          claim for abatement of interest for the 1982 through 1987 tax               
          years.  Respondent stated that tax-motivated interest was                   
          applicable on account of the abusive nature of the SGE                      
          partnership.  In addition, respondent determined that there was             
          no delay or error relating to the performance of a ministerial              
          act warranting abatement of interest.  The correspondence from              
          respondent informed petitioner that he could request                        
          reconsideration of respondent’s findings with the IRS Appeals               
               On July 22, 1998, petitioner appealed respondent’s denial of           
          the informal interest abatement claim.  Specifically, petitioner            

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