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On May 17, 1988, a partner other than the tax matters
partner commenced a case in the Court contesting the adjustments
made in the FPAA. Ultimately, the parties in that case agreed on
the adjustments made in the FPAA, but they disagreed over whether
the IRS timely issued the FPAA. Madison Recycling Associates v.
Commissioner, T.C. Memo. 2001-85. On April 9, 2001, the Court
issued its Opinion addressing that dispute and held that the
period for limitations for assessment had not expired and that
the FPAA was timely. Id. On August 1, 2001, pursuant to that
Opinion, the Court entered a decision sustaining, inter alia,
respondent’s disallowance of Madison Recycling’s claimed $704,111
loss and respondent’s reduction to $0 of Madison Recycling’s
claimed basis. That decision was affirmed on appeal. Madison
Recycling Associates v. Commissioner, 295 F.3d 280 (2d Cir.
2002).
Pursuant to Madison Recycling Associates v. Commissioner,
T.C. Memo. 2001-85, on October 3, 2003, respondent assessed
against petitioner and Mr. Korchak a deficiency of $140,388 in
tax for their taxable year 1982 and interest thereon of
$1,107,797.85 as provided by law resulting from the disallowance
of the claimed $58,089 Madison Recycling loss and the claimed
Madison Recycling tax credits of $114,407.15 As of the time of
15In computing the liability for interest as of Oct. 3,
2003, respondent used the increased interest rate applicable to
underpayments attributable to tax-motivated transactions estab-
(continued...)
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