- 3 -
Commissioner, T.C. Memo. 2003-67; Kelley v. Commissioner, T.C.
Memo. 1993-495. In Kelley, we concluded that “The formation and
operation of the Swanton Coal Programs appear to have as
substance little more than a grandiose serving of whimsy”, and
that they were “nothing more than an elaborate scam to provide
highly leveraged deductions for nonexistent expenses.” We
therefore disallowed the partnership losses at issue, and
sustained the Commissioner’s imposition of increased interest
pursuant to section 6621(c) because the programs were so clearly
tax-motivated transactions.
Because the programs used tiered partnerships, however, our
decision in Kelley did not automatically resolve the tax
liability of partners in Jackson or Smith/Asher, and the
Commissioner continued to negotiate with the tax matters partners
(TMPs) for these partnerships until finally reaching closing
agreements with both of them by mid-1999. After Jackson and
Smith/Asher concluded their closing agreements, respondent
contacted petitioners in November 1999, sending them a notice of
examination that proposed changes to their 1983 and 1984 returns.
In March 2000, respondent sent out notices of deficiency.
Petitioners paid the entire tax portion of their outstanding 1983
and 1984 deficiencies (amounting to $23,977), but did not pay any
of the accrued interest (which had grown to more than $100,000).
After assessing the deficiencies, respondent sent petitioners a
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011