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appointed Mr. Hoyt to act on their behalf with regard to
partnership matters and reaffirmed their prior debt assumption
agreement with the Hoyt partnership.
Petitioner and Mr. Bulger filed joint Federal income tax
returns for 1985 through 1987, on which they claimed substantial
losses and investment credits related to their SGE investment,
and a Form 1045, Application for Tentative Refund, on which they
carried back an investment credit attributable to SGE to 1982,
1983, and 1984. The SGE deductions and credits the Bulgers
claimed significantly reduced their taxable income and overall
Federal income tax liabilities for 1982 through 1987. Following
an audit and related litigation,3 respondent adjusted the Hoyt
partnership losses and investment credits claimed on Mr. Bulger’s
1982 and 1983 individual Federal income tax returns and
petitioner and Mr. Bulger’s returns for 1984 through 1987 and
assessed substantial income tax deficiencies for 1984 through
1987.
On or about July 10, 2000, petitioner submitted Form 8857,
Request for Innocent Spouse Relief (And Separation of Liability
and Equitable Relief), on which she requested relief from joint
3According to respondent, litigation regarding petitioner’s
and Mr. Bulger’s investment in SGE was resolved by this Court’s
order and decision, entered on Nov. 27, 1996, in Shorthorn
Genetic Engg. 1985-1, Ltd. v. Commissioner, docket No. 22069-89.
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