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Opinion by reference and are found as facts. At the time of
filing the petition, petitioners resided in Archer, Florida.
Petitioners owned a minority interest, as tenants by the
entirety, in AllChem Industries Holding Corp. (AllChem), an
S corporation. AllChem made distributions to shareholders
primarily to help them pay income taxes for the current taxable
year. On April 10, 2003, AllChem received a notice of assignment
from petitioners, in which petitioners expressed their intention
that all of the proceeds from any dividend distribution be
allocated to the Internal Revenue Service (IRS), and that one-
half of any distribution be applied as an “advance payment”
toward petitioners’ 2002 taxable year and the other half as an
“estimated payment” for the first quarter of petitioners’ 2003
taxable year. On April 11, 2003, respondent sent AllChem a
notice of levy with respect to petitioner Ryals’s (Mr. Ryals’s)
unpaid income tax liabilities for taxable years 1977 and 1978.1
Four days later, on April 15, 2003, AllChem declared a dividend.
On April 15, 2003, petitioners filed a request for an
extension of time to file their 2002 tax return and also
submitted two payments of $11,000 and $2,000 to be applied to
their 2002 taxable year. Petitioners previously had made, on
June 19, 2002, another estimated payment of $2,000 to be applied
1The notice of levy stated that, as of May 11, 2003, Mr.
Ryals’s 1977 and 1978 tax liabilities would total $1,687,539.78.
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