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indicating designated interest for 1980 in the amount of
$35,275.78 and designated interest in the amount of $24,269.22
for 1981. The entire amount of check No. 242 ($25,545) and
$9,730.78 from check No. 54 was applied to 1980; the remainder of
check No. 54 ($24,269.22) was applied to 1981. The Thompsons’
$34,000 check (check No. 54) was subsequently dishonored. This
was reflected as a debit for the Thompsons’ accounts for 1980 and
1981. In February 1987, the Thompsons made a replacement payment
of $34,340, representing the amount of the dishonored check plus
a 1-percent bad check penalty. The replacement payment was
restored as a credit as of December 31, 1986.
The Thompsons were the only test case petitioners for whom
the IRS processed a prepayment of interest without receiving a
concurrent “advance payment on deficiency” to which the interest
was attributable.
In January 1987, Chicoine and Hallett filed motions in this
Court seeking to suppress the evidence that had been seized in
the raids on Kersting’s office and to shift to respondent the
burden of proof and burden of going forward with evidence. The
Chicoine and Hallett motions in effect turned the February 1987
Maui trial session into a hearing on the motions and resulted in
a continuation of the trial of the test cases.
On March 13, 1987, McWade sent DeCastro a revised decision
document for the Thompsons’ 1980 taxable year, making a minor
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