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penalties “to expedite the closure of the 1994 tax year.” All
this fell through, though, when the Appeals team manager looked
at the arrangement and nixed both the tentative settlement and
the Nicholses’ plea for interest abatement.
In October 2004, the Appeals officer faxed a draft version
of the notice of determination to the Nicholses at their request.
This draft included the NOLs as a separate issue “raised by the
taxpayer” and concluded that the 1994 Form 1040X needed to be
directed to a different division within the IRS if it was to lead
to a reconsideration of the 1994 tax liability. The final notice
of determination, issued on December 22, 2004, no longer included
the NOLs as a separate issue, noting them only as part of a
collection alternative offered by the Nicholses--one which “may
be considered by other functions within the Service.” (This may
refer to the IRS’s audit reconsideration group.) The Nicholses
filed a timely petition to review this final notice of
determination, and the Commissioner has now moved for summary
judgment. The Nicholses were Illinois residents when they filed
their petition, and we put the case on a Chicago trial calendar.
Discussion
Summary judgment is appropriate where it is shown that
“there is no genuine issue as to any material fact and that a
decision may be rendered as a matter of law.” Rule 121(b); Fla.
Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). If there
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