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that petitioners allege decreased in value while their account
was frozen.
On August 10, 1998, petitioners submitted to respondent
additional documents they had prepared pertaining to the casualty
or theft loss issue. Respondent reviewed the documentation and
on October 26, 1998, notified petitioners that respondent's
determination had not changed. Respondent also provided
petitioners with copies of cases supporting respondent's decision
to disallow petitioners' casualty or theft loss.
On November 25, 1998, respondent sent petitioners an updated
report proposing adjustments to petitioners' medical expense and
casualty or theft loss deductions as well as an additional case
supporting respondent's decision regarding the casualty or theft
loss issue. Respondent also sent petitioners a separate letter
soliciting an extension of the period of limitations within which
to audit petitioners' 1995 return. On December 14, 1998,
petitioners signed a Form 872, Consent to Extend Time to Assess
Tax, extending to June 30, 2000, the period within which
respondent could assess the tax due for petitioners' 1995 tax
year.
Respondent sent petitioners a revised audit report dated
January 6, 1999, disallowing petitioners' medical expenses for
lack of substantiation and also disallowing their casualty or
theft loss. On January 11, 1999, respondent closed out the audit
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