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change that reduced the deficiency for that year from $34,425 to
$33,000. McWade later explained: “It must have been I
miscomputed something.” With this modification of the
settlement, the Thompsons’ aggregate deficiencies for 1979-1981
were reduced by 20.55 percent of the deficiencies originally
determined by respondent (i.e., from $79,294 to $63,000).
On June 15, 1987, DeCastro sent a $63,000 cashier’s check
“in partial payment of the total amount due” to the Internal
Revenue Service Center in Fresno on behalf of the Thompsons.
Respondent received the payment of $63,000 on June 17, 1987, and
credited it to the Thompsons’ 1979 account as an advance payment,
less offset of a credit of $775 that was applied to their 1988
tax year. Accordingly, by June 1987, the Thompsons’ payments to
the IRS with respect to the taxable years 1979-1981 totaled
$121,770 ($62,225 as an advance payment of tax, and $59,545 as
interest).
D. IRS Activity Regarding the Thompsons’
1983-85 Returns
In the meantime, an employee of respondent at the Fresno
Service Center in California (with initials A.A.K.) prepared a
statutory notice of deficiency (subsequently dated March 17,
1987) disallowing $67,620 of Kersting deductions claimed on the
Thompsons’ 1983 income tax return. Because the Thompsons had
little taxable income that year, the first whole year of Mr.
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