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Income, Credits, Deductions, etc., reported $447,653 as
petitioner’s share of the income from BP Concessions for 1997.
Petitioners’ Tax Returns
On their Form 1040, U.S. Individual Income Tax Return, for
1997, petitioners reported a Schedule K-1 distributive share of
$447,653 of nonpassive income from BP Concessions and a total tax
of $103,708.2 On their Form 1040 for 1998, petitioners reported
a distributive share of $21,336 of nonpassive income from
Schedule K-1 from BP Concessions and a total tax of $35,909.
They sought a refund of $5,825. On March 29, 2000, petitioners
signed both returns.
Petitioner decided to report the distributive share of
income from BP Concessions on his Form 1040 for 1997 so that he
would not be viewed as underreporting his income. Petitioner
intended to amend his return and “correct the situation at a
2 On their 1997 return, petitioners reported that they had
overpaid their taxes by $217,952 and sought a refund of $192,952
and application of $25,000 to their 1998 estimated taxes. This
alleged overpayment was based on petitioners’ belief that the
Internal Revenue Service (IRS) owed them a refund of $300,000
plus interest. The alleged refund arises from a prior dispute
with the IRS concerning petitioner’s personal liability on unpaid
employment taxes for his corporation, National Waste Co., Inc.
Petitioners claimed a refund on their 1997 return of $300,000
plus interest on the basis of their allegation that the IRS sold
their personal residence at below market value when it foreclosed
on their house to collect the unpaid employment taxes.
Petitioners never filed a claim for refund with a U.S. District
Court.
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