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amounts of tax they would have had to pay. We have calculated
the reduction percentage as follows:
The numerator is $30,000, representing the total
deficiencies paid by the Thompsons for the taxable years before
the Court, that is, their taxable years 1979-1981.
The denominator is initially $79,294, representing the total
deficiencies that respondent asserted against the Thompsons for
their 1979-1981 taxable years. To this sum we add $980,
representing the deficiency the Thompsons escaped paying for the
year 1983 by virtue of respondent’s unexplained failure to follow
up on the statutory notice of deficiency for that year. We also
add $1,624 to the denominator, which represents the Thompsons’
tax savings attributable to respondent’s allowance of a 1987
personal interest deduction that was overstated by $5,814
($27,914 - $22,100). The total denominator is thus $81,898.
$30,000/$81,898 = 36.63%
G. Additional Relief
1. Elimination of Non-Kersting Additions
Although the parties’ stipulation of settled issues can be
read as limiting penalty relief to Kersting-related additions,
see supra Part II.B., respondent does not dispute that
implementation of the Court of Appeals’ mandates includes the
elimination of all penalties and additions, including non-
Kersting-related items such as late filing additions. We agree
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