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and a $2,844 refund for 1982 (and any interest that accrued on
the overpayments and refund) would have been available to pay
petitioners’ 1980 tax liability.
Petitioners decided to fully pay their White Rim tax
liabilities in 1987. In 1987, petitioners reasonably believed
that, after they filed their amended returns and respondent
applied overpayments to their 1980 year, they had paid amounts
substantially equal to the total tax liabilities arising from
their investment in White Rim for 1980-83, including the $39,599
deficiency respondent had determined for 1980. Petitioners’
belief on this point was reasonable as shown by the fact that, in
August 1998, after respondent processed the amended returns,
respondent applied a $74,537 credit to petitioners’ 1980 tax
year. The pendency until 1998 of petitioners’ 1980 Tax Court
case has no bearing on the interest abatement issue here because
petitioners reasonably believed that they had already paid the
tax they owed for 1980.
We conclude that respondent’s loss of petitioners’ 1981-82
amended returns from 1987 to 1998 caused them to delay paying
their 1980 tax until 1998.
The situation in this case is analogous to that in Douponce
v. Commissioner, T.C. Memo. 1999-398, where the Court held that
the Commissioner’s failure to provide a taxpayer with a correct
payoff amount was a ministerial error that warranted the
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