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Income Tax Examination Changes, marked it “Copy—Information Only”
and sent it to petitioners. This document, prepared 2 years
after the closing agreement and almost 7 years after the end of
the last year at issue, reflected respondent’s computation of
petitioners’ tax liabilities after the agreed treatment of the
Comco items was taken into account.
Respondent then assessed the deficiencies shown in
respondent’s Income Tax Examination Changes against petitioners
for the years at issue without issuing petitioners a deficiency
notice. Specifically, respondent assessed a $10,763,212
deficiency for 1988 and a $2,644,240 deficiency for 1989. These
assessments did not meet the statutory exceptions to the
requirement that a deficiency notice must first be issued before
assessment. See sec. 6213(b). Specifically, the assessments did
not arise out of mathematical or clerical errors, were not the
result of a determination that a tentative carryback or refund
adjustment was excessive, and were not based on the receipt of
any payment of tax.
After these assessments, respondent continued to alter the
amounts petitioners owed for the years at issue. Respondent sent
petitioners five subsequent Income Tax Examination Changes from
1996 through 2001. Respondent sent the latest report to
petitioners in October 2001, 12 years after the end of the last
year at issue and 7 years after the parties executed the closing
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Last modified: May 25, 2011