- 7 -
perspective, the 7-percent reduction settlement offer was
equivalent to allowing a theft loss deduction in the year of
payment.6
In addition to reducing the deficiencies by 7 percent,
respondent’s offer incorporated other concessions and
adjustments: (1) To concede the negligence addition to tax and
increased interest imposed on tax-motivated transactions pursuant
to section 6621(c); (2) to concede an annual deduction under
section 162 or 212 for certain “leasing” program participants for
expenses that exceeded the out-of-pocket adjustment; (3) to
concede the deficiency in full to participants in one particular
program who could show that funds paid to their children did not
give rise to constructive receipt of income by the parents; and
(4) to make appropriate adjustments if the participant had
reported a capital gain upon the surrender of stock certificates
to Mr. Kersting. Respondent’s purpose in offering these
concessions and adjustments was to provide similar treatment for
all Kersting program participants who wished to settle their
cases.
Although District Counsel generally is expected to adhere to
the terms of an official project settlement offer, once a tax
6Respondent’s position represented an additional concession
insofar as the allowance of a theft loss deduction for payments
induced by misrepresentation is postponed until the year of
discovery of the theft. See sec. 165(e); Bellis v. Commissioner,
61 T.C. 354, 357 (1973), affd. 540 F.2d 448 (9th Cir. 1976).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011