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conclude that the 2000 reporting should be altered in two
respects. First, having learned that the eConnect stock was
acquired in 1999, rather than 1998, Mr. Gill realized that the
gain generated upon disposition was short term in nature.
Second, based upon the fact that the Valdes & Moreno account was
jointly held by decedent and Mr. Greene, Mr. Gill was of the
opinion that the gain should have been split evenly between the
two joint tenants.
The IRS disagreed that the gain was so divisible and on
January 15, 2004, issued to decedent a notice of deficiency
determining the aforementioned deficiency and accuracy-related
penalty. The notice reflected two adjustments: Interest income
was increased by $975 reported to the IRS by Wells Fargo Bank,
and the eConnect sales were reclassified as resulting in short-
term capital gain.
Shortly thereafter, the estate submitted to the IRS a Form
1040X, Amended U.S. Individual Income Tax Return, on behalf of
decedent for the year 2000. Mr. Gill prepared the amended return
incorporating only one-half of the proceeds from the eConnect
sales but treating the concomitant capital gains as short term.
The net effect was a decrease in total tax of $21,451, for which
the estate requested a refund. The amended return was received
by the IRS on February 9, 2004, but was not processed. A notice
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