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to their 2002 taxable year. Respondent had not determined a
deficiency in income tax for petitioners’ 2002 taxable year at
the time petitioners filed their extension request on April 15,
2003.
On May 9, 2003, respondent received from AllChem two
separate checks each in the amount of $7,000 that petitioners
intended as estimated tax payments for their 2002 and 2003
taxable years.2 Respondent credited one of the $7,000 payments
to petitioners’ 2002 taxable year.3
On October 15, 2003, petitioners timely filed their 2002 tax
return and reported: A tax liability of $23,979, withholding
credits of $12,694, estimated tax payments of $18,000,4 $11,000
2In a letter attached to the checks, AllChem’s vice
president of finance stated:
Pursuant to the IRS Notice of Levy dated April 11,
2003, enclosed are two separate checks in the amount of
$7,000 each made payable to the IRS which represent a
dividend distribution of AllChem Industries Holding
Corporation (the “Company”) approved April 11, 2003 and
otherwise payable to Jack C. Ryals and Susan Bocock
Ryals as tenants by the entireties. Also enclosed are
an Assignment of Dividend Distribution and a Notice of
Assignment provided to us by Mr. and Mrs. Ryals on
April 10, 2003.
3Respondent credited the other $7,000 payment from AllChem,
that petitioners intended as estimated tax payments for 2003, to
Mr. Ryals’s 1977 tax liability. We note that petitioners’ 2003
taxable year is not at issue in the instant case.
4Petitioners’ arguments have not been consistent. The
$18,000 of estimated tax payments that petitioners claimed on
their 2002 tax return includes the $7,000 payment from AllChem,
(continued...)
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