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investment entity as “black investment taxes” and listed the
amount of tax paid by the entity on petitioners’ behalf as
$80,000.00. Petitioners entered $80,000.00 on Form 1040, line 63
(Other payments), and claimed a refund on a total overpayment of
$81,312. Respondent processed the tax return and promptly issued
to petitioners a refund check in the amount of $81,312.
On August 9, 2000, respondent sent a notice of deficiency to
petitioners for the taxable year 1998 which stated in pertinent
part:
It is determined that the amount reported as Other
Payments on your tax return for the taxable year 1998
is not allowable because there is no provision in the
Internal Revenue Code for a refundable tax credit for
the payment of reparation for slavery. Therefore, your
allowable Other Payments is $0.00 rather than
$80,000.00 as shown on your return. Accordingly, your
tax liability is increased by $80,000.00 for the tax
year 1998.
Petitioners filed a timely (imperfect) petition and an amended
petition challenging the notice of deficiency described above.3
The amended petition states in pertinent part: “We request the
2(...continued)
imposed on the taxable income and capital gains of a regulated
investment company (RIC). Sec. 852(b)(3)(D)(i) provides that the
RIC’s shareholders “shall include, in computing his long-term
capital gains in his return * * * such amount as the * * * [RIC]
shall designate”. Sec. 852(b)(3)(D)(ii) provides that such
shareholder “shall be deemed to have paid * * * the tax imposed”
under sec. 852(b)(3)(A) and the shareholder shall be allowed a
“credit or refund, as the case may be, for the tax so deemed to
have been paid by him.”
3 At the time the petition was filed, petitioners resided
in Satellite Beach, Florida.
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