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postponed for a year the accrual of interest on the first year’s
deficiency, thereby reducing the total interest that accrued on
the deficiencies. This was accomplished by zeroing out the
taxpayer’s agreed deficiency for the first year and adding it to
the agreed deficiency for the second year.
II. The Thompsons’ Participation in the Kersting
Tax Shelters
A. The Thompsons’ Tax Returns
1. Prepetition Years--1977 and 1978
Although the Thompsons participated in one of Kersting’s
programs during 1977, they did not claim any Kersting-related
interest deductions on their income tax return for that year,
because their accountant refused to claim those deductions on the
return.
The record suggests the Thompsons first claimed Kersting
deductions on their 1978 tax return, which was prepared by an
accountant recommended by Kersting.
2. Years Before the Court
1979
The Thompsons filed their 1979 tax return, pursuant to an
extension, on May 29, 1980. The Thompsons reported Kersting
deductions of $39,477 on that return.
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