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Respondent’s Affected Items Adjustments
On October 6, 2003, respondent issued a notice of deficiency
(notice) for 1982 to petitioner. Respondent determined that
petitioner was liable for additions to tax under sections
6653(a)(1) and (2) and 6659, and increased interest under section
6621. In the Form 886-A, Explanation of Items, accompanying the
notice, respondent explained that he had adjusted petitioner’s
reported basis in the recyclers to zero and disallowed the loss
and the investment and business energy credits petitioner claimed
with respect to Madison pursuant to our decision in docket No.
10601-88. In Form 4549A, Income Tax Examination Changes,
accompanying the notice, respondent informed petitioner that the
notice reflected only additions to tax.
On December 29, 2003, petitioner’s petition disputing
respondent’s adjustments, denying that petitioner had acted
negligently in the preparation of his tax return or in the
valuation of the assets on the underlying return, and denying
that he had engaged in a tax-motivated transaction was filed.
The resulting case was tried on September 9, 2004, and both
parties submitted posttrial briefs.
OPINION
We have decided many Plastics Recycling cases. Most of
these cases, like the present case, raised issues regarding
additions to tax for negligence and valuation overstatement.
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