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$59,545 from their 1986 taxable year.15 The Thompsons did not
claim any Kersting or Bauspar deductions on their 1987 return.
Poltash did not discuss the preparation of the Thompsons’ 1986 or
1987 returns with McWade or Sims.
Revenue Agent Speers examined the Thompsons’ 1986 income tax
return. She asked about the $59,545 interest deduction in
letters to the Thompsons dated February 26 and March 25, 1988.
In a telephone conversation with Speers on May 23, 1988, Mr.
Thompson explained the $59,545 interest expense deduction to her
satisfaction. Speers closed the examination of the Thompsons’
1986 return without making any adjustments to the return. Her
examination workpapers reflect her notation that “TP paid large
interest to IRS on Schedule A--verified per transcripts.”
In June 1989 a revenue agent16 screened the Thompsons’ 1987
income tax return for Kersting deductions. The return bears a
stamp stating “Income Tax Survey After Assignment”, meaning that
the agent saw nothing obvious for examination and returned the
15Although Poltash claimed to lack any recollection of his
attempt to claim the interest deduction, he conceded the $42,945
amount might have represented an attempt to claim for 1987 the
portion of the $59,545 claimed on the 1986 return that produced
no tax benefit to the Thompsons. We note a slight discrepancy
between the amount of the deduction actually used on the
Thompsons’ 1986 return ($16,251) and the figure underlying the
$42,945 “carryover” for 1987 ($59,545 - $42,945 = $16,600).
16The signature of the examining agent is difficult to
decipher; it appears to be “Art (or Pat) Taylor.”
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