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With respect to the years at issue in this case, petitioners
filed Federal income tax returns in which all or a portion of the
taxes shown on the returns was not paid. Petitioners were
assessed the taxes shown on their returns. No notice of
deficiency was ever issued to petitioners for any of the years
included in this petition, but petitioners are not challenging
the underlying deficiencies. Instead, petitioners claim that
their tax liabilities for the taxable years 1992, 1993, and 1997
have been fully satisfied by intermittent payments made
throughout 1996 and 1997 and the application of overpayment
credits from the years 1996 to 2000 and 2002. Petitioners also
contend that their tax liability for the taxable year 1988 was
fully satisfied during the 1990 bankruptcy through the collection
by respondent of a second mortgage held by petitioner husband.
Petitioners’ bankruptcy petition reflects the assignment of
the second mortgage to the IRS to satisfy tax deficiencies for
several preceding years, and petitioners claim the deficiencies
satisfied by the assignment included 1988. Petitioner husband
testified he intended all payments made throughout 1996 and 1997
to be applied against the 1992 deficiency because the 1988
deficiency was satisfied by the assignment; however, respondent
applied them to both the 1988 and the 1992 deficiencies.
Respondent does not dispute the receipt of periodic payments from
petitioners but contends that the mortgage satisfaction did not
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