Document 24-12
Filed 06/12/2006
Page 1 of 18
Exhibit R
Case 1:05-cv-00999-MMS
e
Document 24-12
Filed 06/12/2006
Page 2 of 18
Depa_meut of the Treasury Internal Revenue Service
"1Hopkins Plaza, Room 1208 ._aitimore, MD 21201
Date: APRIL CERTIFIED 15, 2004 MAIL Letter Number: 531 (DO) Form Humber: 1040 Person to Contact: G. L. PENNINGTON Telephone Number: (410) 962-3093 Employee Identification Number: 52-07516 T entify_g Number:
KEITH A & LAURA B TUCKER 383! TURTLE CREEK BOULEVARD DALLAS TEXAS 752!9-4412
UNIT 6H
A 4: GROUP 8:SM Last Day to File s Petition With the United States Tax Court: _-LY 14, 2004
PENALTIES
Tax Year Ended: 12/31/2000 DeficiencyIncrease In Tax $15,518,704.00 IRC Section 666..___!2 $6,206,488.00
.[RCSection
IRC Section
NOTICE OF DEFiCiENCY
We have determined that you owe additional tax or other amounts, or both, for the tax year(s) identified above. This letter is your NOTICE OF DEFICIENCY, as required by law, The enclosed statement shows how we figured the deficiency. If you want to contest this determination in court before making any payment, you have 90 days from the date of this letter (150 days if this letter is addressed to you outside of the United States) to file a petition with the United States Tax Court for a redeterrnination of the deficiency. You can get a copy of the rules for filing a petition and a petition form you can use by writing to the address below.
United States Tax Court 400 Second Street, NW Washington, DC 20217 The Tax Court has a simplifiedprocedure for small tax cases when the amount in disputeforeach tax year is $50,000 or less. ifyou intendto file a petitionfor multiple tax years and the amount in disputefor any one ormore of the tax years exceeds $50,000, this simplified procedure is not available to you. If you use this simplifed procedure, you cannot appeal the Tax Court's decision. You can get informationpertaining to the simplified procedure for small cases from the Tax Court by writing to the court at the above address or from the court's intemet site at www.ustaxcourt, q.9__. o \ Send the completed petitionform, a copyof this letter, and copies of all statements and/or schedules you " received withthis letter to the Tax Court at the above address. The Court cannot consideryour case ifthe petition is filed late. The petition is considered timely filed if the postmarkdate falls within the prescribed 90 or 150 day
Letter 531 (DO) _ev.
6-2003)
I
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 3 of 18
period and the envelope containing the petition is properly addressed with the correct postage. The time you have to file a petition with the court is set by law and carmot be extended or suspended. Thus, contacting the Internal Revenue Service (IRS) for more information, or receiving other correspondence from the IRS won't change the allowable period for filing a petition with the Tax Court.
As required by law, separate notices are sent to husbands and wives, if this letter is addressed to both husband and wife, and both want to petitionthe Tax Court, both must sign and file the petition or each mustfile a separate, signed petition. If more than one tax year is shown above, you may file one petitionfor m showingall of the years you are contesting. You may represent yourself before the Tax Court, oryou may be represented by anyoneadmittedto practice before the Tax Court.
if you decide not to file a petition with the Tax Court, please sign the enclosed waiver form and return itto us at the IRS address on the top of the front of this letter. This will permit us to assess the deficiency quickly and can help limit the accumulation of interest. if you decide not to sign and return the waiver, and you do not file a petition with the Tax Court within the time limit, the law requires us to assess and bill you for the deficiency after 90 days from the date of this letter (150 days if this letter is addressed to you outside the United States). NOTE: If you are a C-corporation, section 6621 (c) of the Internal Revenue Code requires that we charge an interest rate two percent higher than the normal rate on large corporate underpayments of $100,000 or more.
if you have questions about this letter, you maywrite to or call the contactperson whose name, telephone _'umber, and IRS address are shown onthe front of this letter, if you write, please includeyourtelephone number, ·_ebesttime for us to call you ifwe need more information,and a copyof this letterto help us identifyyour account. Keep the originalletterfor your records. If you prefer to call and the telephone number is outsideyour local calling area, there willbe a long distance charge to you. The contact person can access your tax information and help you get answers. You also have the rightto contact the office ofthe Taxpayer Advocate. Taxpayer Advocate assistance isnot a substitutefor establishedIRS proceduressuch as the formal appeals process. The Taxpayer Advocate is not able to reverse legally correct tax determinations, nor extend the time fixed by lawthat you have to file a petitioninthe U.S. Tax Court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets promptand proper handling. Ifyou want Taxpayer Advocate assistance, please contactthe Taxpayer Advocate for the IRS officethat issued this notice of deficiency. See the enclosed Notice 1214, Helpful Contactsfor Your"Notice of Deficiency", for Taxpayer Advocate telephone numbers and addresses.
Thank you for your cooperation. Sincerely,
Mark W. Everson Commissioner /,
M. A. Lenihan Acting Technical Services Territory
_nclosures:
Manager
Explanation of tax changes Waiver Notice !214
Letter 531 (DO)
(Rev.
6-2003) KT10003855
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 4 of 18
Fo_ Janua 1983)·I 4089 Department f Deficiency - Waiver o (Rev. Notice ofthe Treasury- InternalRevenueService ·Name, SSN or EIN, and Address of Taxpayer(s) KEITH A & LAURA B TUCKER 383t TURTLE CREEK BOULEVARD UNiT 6H DALLAS TEXAS 75219-4412
S:C:F:TS:E: Symbols GRP 8:SM AREA 4:
Kind of Tax iNCOME Tax Year Ended 12131/2000 increase in Tax $t5,618,704,00 IRC 6662 $6,206,488,00 Penalties
See the attached explanation for the above deficiencies ! consent to the immediate assessment and collection of the deficiencies (increase in tax and penalties) shown above, plus any interest provided by law.
Your Signature
(Date signed) Spouse'sSignature, if A Joint Return Was Filed
Taxpayer's Reprssentative Sign Here Corporate Name: i_ _, (Date signed)
(Date signed)
Corporate Officers Sign Here
(Signature)
(Title)
(Date signed)
(Signature) Note: Who Must Sign
(Title)
(Date signed)
If youconsent tothe assessment f the amounts o shown inthiswaiver,pleasesignandretum itin orderto limitthe accumulation interest ndexpediteourbillto you.Your of a consentwillnotpreventyoufromflunga claimforrefund (afteryouhavepaidthe tax)if youlater believeyouare entitledto e refund.It will notpreventusfromlater determining,f necessary, hat youowe additionaltax;,nor i t extendthe timeprovided lawforeitheraction. by if You later fi!e a claimand the InternalRevenue Servicedisallows youmay file suitfor refund a district it, in court or inthe UnitedStatesClaimsCourt,butyoumay not file a petition withthe UnitedStates Tax Court.
If thiswaiverisfor any year(s)for whichyou filed a joint return, bothyouendyourspousemustsignthe odginaland duplicate thisform.Signyourname exactlyas it appears of onthe return.If youare actingunderpowerof attorneyfor yourspouse,you may signfor himor her. Foran agentor attorneyacting undera powerof attorney, powerof attorneymustbe sentwiththisform if a notpreviously filed. For a personactingin a fiduciary capacity(executor, administrator, a trustee),file Form 56. NoticeConcerning or FiduciaryRelationship, thisformif notpreviously with filed. For a corporation, nterthe nameof the corporation e followedbythe signature andtitle ofthe officer(s)authorized
sign.
.....if you"agree, please sign one copy and return it; keep the other copy for your records. Form 4089 (Rev. 1-83)
KT10003856
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 5 of 18
ms
Department of the Treasury Internal Revenue Service
r
Notice 1214 (Rev. 2-2004) Catalog Number 26162Z
Helpful Contacts for Your "Notice of Deficiency"
Do you havequestions/concerns aboutthis "'Notice of Deficiency?" First contact the person whose name and telephone number appear atthetop ofyourletter. This person candirectly access yourtaxinformation andhelpyou getanswers.
DISTRICT OF Baltimore Office Taxpayer Advocate 31 Hopldm Plaza Room 940 BMfimom, MD 21201 (410) 962.2082
)D_WA
Des Moines Office TaxpayerAdvocate 210 WalnutSt., Stop 1005-DSM Des Moines, IA 50309
(515") 284-4780
Do you want assistance TaxpayerAdvocate?This bV'a, Ft. Laaderdale Office Taxpayer Advocate assistance isneta substitute forestablished procedures, IRS 7850 SW 6thCourt formal Appeals processes, etc.The Taxpayer Advocate Plantation, FL 33324 cannotreverseegal l ortechnically correct taxdeterminations, (954) 423-7677 nor_tend thetimeallowed law tofile petition by a inthe 3acksonvRie Office Taxpay_ Advocate U.S.Tax Court. However,theTaxpayerAdvocate can give · 841 Prudential Dr., Suite 100 yourtaxmatter properand prompthandling when unresolved Stop: TA:Atianta/Infl: flAX through normalchannels. ou cancall Y ton-free-877-777-4778 Sao_onvill¢, FL 32207 1 (904) 665-1000 andaskforTaxpayer Advocateassistance, orcall thetelephone GEORGIA n_ub_r oftheTaxpayerAdvocatefortheINS officeisted l Atlanta Office below that issued this"Notice ofDeficiency."
Taxpayer Advocate 401 W. Peaetitree St., NW, Sunnnit Building Stop 202-D Atlanta, OA 30308 (404) 338-8099 '
O_._QgJP.A
KANSAS
Wichita Office Taxpayer Advocate 271 W. 3rd St., North Stop 1005-WIC Wichita_ KS 67202 (316) 352-7506 KENTUCKY Louisville Office Taxpayer Advocate 600 Dr. MLK Jr. Place iederal Building-Room Louisville, KY 40.202 (502) 582-6030
622
ALABAMA Birmingham Office Taxpayer Advocate 801 Tom Maxtin Dr. Birmingham,,AL 3521 l (205) 912-5631 Anchorage Office Taxpayer Advocate 949 East 36th Ave., Stop A-405 Anohomg% AK 99508 (907) 27!-6877 Phoenix Office Taxpayer Advoca_ 210 E. Earl! Drive, Stop 1005-PHX Phoenix, AZ 85012 (602)2O7-8240 ARKANSAS Little Reek Office Taxpayer Advocatb 700 W_U Capitol St., Stop 1005-LIT Little Reek, AR 72201 (501) 324-6269.
Oakland Office Taxpayer Advocate . 1301 Clay St. # 1540S Oakland, CA 94612 (510) 637-2703 Sacramento Office Taxpayer Advocate 4330 Waft Ave. Sacramento, CA 95821 (916) 974-5007 Taxpayer Advocate 55 S. Market St., Stop HQ000-4 San Ios_, CA 95113 (408)817-6850
LOUISIANA New Orleans Office Taxpayer Advocate 600 South MaestriPI., Stop 2 New Orleans, LA 7013.0 (504)558-3001 Augusta Office Taxpayer Advocate 68 Sewal] St., Room 313 Augusta, ME 04330 (207) 622-8528 MARYLAND Baltimore Office Taxpayer Advocate 3l Hopkins Plaza Room 940 Baltimore, MD 21201 (410) 962-2082 Boston Office T_xpayer Advocate 25 New Sudbury St. Boston, MA 02203 (617) 316-2690 MICHIGAN Detroit Office Taxpayer AdvOcate McNamara Federal Buildin. g 477 Michigan Ave.- Room 1745 Detroit, M[ 48226 (313) 628-3670 MINNESOTA St. Pa_l Office Taxpayer Advocate Stop 1005-STP 316 North Robert St. St. Paul, MN 55101 (651) 312-7999
nA_WAH
Honolula Office Taxpayer Advocate Stop H-405 300 Ala Moans Blvd., Honolulu, HI 96850 (808) 539-2870
..
#50089
COLORADO
Denver Office Taxpayer Advocate 600 17th St., Stop 1005-DEN Denver, CO 80202-2490 (303) 446-1012 CONNECTICUT. ][:£arfford Office Taxpayer Advocate 135 High St., Stop 219 Hartford, CT 06103
Boise Office TaxpayerAdvocate_ 550 West FortSt., Box 041 Boise, ]D $3724 (208) 334-1324 Chieage Ofilee TaxpayerAdvocate 230 S. Dearborn St. Stop I005.¢HI Chicago,IL 60604 012) 566-3800 ' " Spr[egfield Office. Taxpayer Ailvocate 320 W. Washington St. Stop 1005,SPD Springfield, IL 62701 (217) 527-6382 Indianapolis Office
CAL_ORNL_
Lagtma Niguel Ot_ce Taxpayer Advocate 24000 Avila Road-Room 3362 Laguna Niguel, CA 92677 (949) 389-4804 Los Angeles Office Taxpay_ Advocat_ 300 IN. Los Angel_ StStop6710 Room 5109 Los Angeles, CA 900.12" (213) 576-3140
(860) 7564555
DELAWARE
Wilmington Office Taxpayer Advocate 409 Silverside Rd. Wilmington, DE 19809 · (302) 791-4502"
TaxpayerAdvocate
575 N. Pgnnsylvania St., Stop TA770 Indianapolis, 46204 IN (317) 226.6332
KT10003857
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 6 of 18
Dep_"tmefll
ol l_e Tr_,,_-_ary - Ir_t(o'n_l Ruv_ue
Service
i=orm 4549A
t
i
Income
Tax Examination
Changes
-_
J I:bat,,am FormNo:
I
NameandAddress ofTaxpayer KEITH A _ LAT!aA B TUCKER 3831 TUMThE CREEK BLVD. UNIT 6H DALDAS t. Adjustmsntsto Income a, Itemized Deductions
·_ orEI Numh,r _lnaflort changes, were dlscuss_l.
I
Pemonwlthwhom ....... Namea,d Titlm: TX 75219
... , ,
I
104D
Period End _=/_zn=_o !Permd End
Corga-_as_ve/Noz · (go,oo) )9,188,666.00
I
,
Per|od End
b. Sch E-Inc/Loss._z+-mmship/S 0.
d,
e.
£ g. h.
L
i. ..
I.
m. n. O. 2. Total Ad|ustmen_ 3, TaxableIncome Per Return as PreviouslyAdiusted or 4. Corrected Taxable Income Tax Method FilingStatus 5. Tax 6. Add_onalTaxesI Alternative MinimumTax 7. Corrected Tax Liability Credits b.
C. 39,IB8,646,00
s,¢_,S73,oo
44,823,S19,00: ) SCheDULED )Joint
17, 62_, 104,00
d. 9. Balance (Line 7 lesstotal oflines 8a through8d) r..=,. ,,, ,, 10. Plus a. Other b. Ta_,s ¢ d, tl. Tot_il Corrected Tax Uabli|ty0ine 9 plusline 10a - 10d) 12, Total TexShown on Returnores PreviouslyAdjusted !3, Adjustments to:a, SpecialFuelsCredit b, . 14. Deflelelt©y.ln_reasein Tax or (_era.s.sessmenL Decreasein Tax)(Line 11 less 12 adjustedby 13) 15.Adjustments P_payment Credits to 16. BalanceDue or (Ove.rpa_i_errl) Line 14 adjusted by' ( Une 15) ( Excludinginterestandpenalties) 17,62_,i0a.0_
17,622,104,00
2_ID3_OD.QD
15,518,?04.00
1E,51_,_D4.00
The InternalRevenueServicehas agmeanentswith Statetax agencies underwhichinformation aboutFederaltax, Including increases or decreases,is exchanged withthe States. Ifthis changeaffecis the amountof your8tats incometax, youshouldfile the State form, You may be subject o bmckup t wrd_hoIdingyou underreport ou_interest dividend,or p_C_ronage idendincomeand do notpaythe _ y dh, required tax. The IRSmay orderbackupwithholding at 3t pementafter four notices have beenissuedto youovera 120=day period andthe tax has beenassessedandremainsunpaid. RGSVen_n 4, O0.0 0 Fom_ G4549A C
KT10003858
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 7 of 18
Form4549A
t
income Tax Examination
Changes
! Page 2
Z040 End Period End
2
N_meandATfdressfTaxpayer o KEITE A & LAURA B TUCKER t7. Penalties a, Accuracy-$RC b.
C.
6662
I;,206,
dgS.OD
d,
e.
f. g, h. i.
j.
k. I.
m,
rl.
18. Total Petmities Underpaymehf: at_ibblableto negligence: 1981-1g87)A tax ( additionof50 percentofthe interestdueon un.derpaym_t will a_rue untilpaidor assessed Underpayment ttributable fPaud: 1981.t 987) a to ( A tax addition of 50 per_nt tithe interestdueon underpayment ill accrue untilpaidor assessed w Underpayment ttributable Motiv_edTrensa_ons TMT a Tax interestwillaccrueandbe ass¢==_l t20% of at unde_ay_.._ent in accordancewithIRC 6621(c) rate 19, Summary of Taxes, Penalties and lr_erest: a. Balanoedueot Overpayment axes- Line16, Page 1 T b, Penalties(Line 18, Page2).camput_dto o4/z4/=004 ¢, interest(IRC§ 6601)-compuledto os/___/_.oo,t d. TMT l_erest- compu_,dosl_/=o04 onTMT underpayrnen_
6,S0_,488,00
0.00
"15,51g,"204,
5,2Q6,_88.00 .5,339,265.4_.
O0
e., ,An_, dueor refund ,q,nt (sum oflinesa,b, endd) . Otherinformation:
0.00 27, 06"t, _57,42
interest for the tax year 2000 will be suspended from 10-i6=2004 _ntil 2t days after the mailing or personal delivery Of this report, in accordance with IRC 6404(g). This suspension of interest is not ·reflected in the interest comPutation= . ..
,
. .
"
.
52-07253 I
.
Michael A. RGSVem!o_4. oo, so
KT10003859
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 8 of 18
ADJUSTMENT:
SCHEDULE
E-iNCOMEILOSS-PARTNERSHIP/S-CORPORATION
2OOO
PER RETURN: PER EXAM: ADJUSTMENT:
($ 39,188,666)
-0-
$ 39,188,666
EXPLANATION:
it has been determined that the loss you claimed from your 100% ownership in Siigo (2000) Company, inc. is not allowed as a deduction. Further, it has not been established that you are entitled to the deduction or loss under any section of'he internal Revenue Code° ..
Accordingly, 2000, your taxable income is increased $39,188,666 for the taxable year ending December 31,
KT10003860
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 9 of 18
A_JUSTMENT:
iTEMiZED
DEDUCTIONS
2000
.==.m==.===.=
PER RETURN: PER EXAM: ADJUSTMENT:
$ 326,709 326,72-9 ($ 20)
EXPLANATION:
As a result of the examination of your tax return, automatic adjustments caused by itemized deduction limitations have been adjusted. See the attached schedule for the computation. Accordingly, your taxable income has been decreased $20 for tax year 2000,
KT10003861
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 10 of 18
Name OfTaxpayer;, ]den_oationNumber:
AURA
B TUCKER Total
04/14/2g04
4.oo.ooo
2000 - SCHEDULE A =iTEMIZED DEDUCTIONS
I.Medi_l, dentaland insumnoe pmmiurns 2. 7.50% of_just_l Gross income 3. Net Msdlosland Dental Expense 4, Taxes 5, HomeinterestExpenss & l_eslment Interest 7. OtherInterestExpense 8. Total InterestExpense 9. Con_butions 10, Casualtyandtheft Losses 1t. MovingExpenses 12. MlsGellaneousnduct(ons d subjecttoAGI limit 13. ,00% of AdjustedGross income 14. ExcessMiscellaneous deductions 15. Other _mcellaneous dedu_ons I6, Total itemizeddedu_ons (Sum of Lines3,4,8, 9,10,11,t4, end 15 less anyapplicablelimitation)
Pier RETURN 0.O0 447,I19.00 0,00 65,637,00 0.00 310,879.00 0.00 310,879,00 13,615.00 0.00 0.00 6,632.00 ] ] 9_3;_,00 0,00 0,00 326,709.00
PEREXAM 0.00 3,386.26g.00 0.00 65,63%00 0.00 3]0,g79,00 0.00 310,879.00 t3,615,00 0._ 0._ 6,632.00
903,005.00
ADJUSTMENT 0.00
0.00 0.00 0.00 0.00 0.00 0,00 0,00 0.00 0.00 0.00
0._ 0,_ 326,729,00
0.00 0,_
(20.00)
ITEMIZED DEDUCTIONSWORKSNEET - PER EXAM
A- Total&lines 3, 4, 8, g, 10, 11, 14.,and 15 B. Total of lines3, & 10, (plusany gambling C, LineA lass LineB D, Multiply amounton line C by80% the F..-Adjus'md Grossincome fromForm 1040 F. ItemizedDeductionUmita_on G. LlneE lessLineF H; MulUply amounton Line G by3% the I. Enterthe smaller of Line D or Line H J. Total ItemizedDedu_ions(enteredon line 16 above)
390,131 ;00 310,879.00
79,252.00
03,4O2.00
45,150,24&00 128,950,00 45,021;298,00 1,350,639.00 63,402.00 326,729.00
KT 10003862
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 11 of 18
K.EITHA & NameOf Taxpayer. identification umber:. N
Total
2000 =PERSONAL EXEMPTION WORKSHEET 1, Mu_ply $ 2,800,00bYthe.total numberof exemptions claimed on Form 1040. line6e 2. Adjusted Grossincome 3. Limitation basedon RlingStatus 4. Subtractlne 3 from line2 l 5. :Divideline4 by" 2,500 $ ($1,250 ifmarriedfiling separate) 6. Multiplyline5 :by2% and enter the result as a deaimal 7. MultiplylineI by line 8 8, Deduction for exemptions(Subtractline7 from line1)
s,6oo.oo
45,150_244_.00 193,400.00 44_956,841_,0K)
0.00
0.00 0._ 0.00
Note: It'Line4 is morethan $12.2,500,or ($61,250, If rnarded fillingseparately), deduction a for exemptions cannot be taken.
KT10003863
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 12 of 18
Name of Taxpayer: Identification Number.
LAURA B TLTC_F__ 7
Total
04/14/2004 4.0O.00
2000 - _CHI_DULE D - CAPITAL GAINS AND LOSSES 1. Short-term oapital gainor !oss 2. Short-termcapitallosscarryover 3. Net Short-term Gain or Loss(Addline 1 and 2) 4. Long=term capitalgain or loss 5. Long-termcapital gainor losscarryover 6. Net long-termGain or Loss(Addline4 and 5) 7. 8urn of lines3 and 6 - Net CapitalGain or Loss 8. CepttellOSS limitalion 9. Capit_ Gain or Loss- As Corrected 10.CapitalGain or Loss- Per Return 11. Une 9 lesslinet 0 =Adjustmento Income t CORRECTEDCARRYOVER 12.Short-term Carryover Subsequent ear to Y 13. Long-termCarryover SubsequentYear to COMPUTATION OFALTERNATE TAX 14.Taxableincome 15.Smallerof line 6 or line7 t6. Form4952, line4a 17.Subtract line 16 from line 15 18.Combineline3 and Total28% Rate Gain (not lessthan (3) 19. Smatler ofline 18 and Total28% Rate Gain 20. UnrecaptumdSe_on 1250 Gain 21. Add line 19 and 20 22. Subtractline2t from line 17 (notlessthan 0) 23. Subtractline22 from line 14 (notless then0) 24. Smallerof line 14 or 43,850.00 25, Smallerof line23 or line24 26.5,J_r_c%line 17 from!ins!4 (_t lessth_n 0) 27. Largerof line25 or line26 28. Tax on amounton line27 29. Amountfromfine24 30. Amountfromline23 31. Subtract line30 from line29 (notless than0) 32. Multiplyline 3t by 10% 33, Smallerof line 14 or line22 34. AmountfromOne31 35. Subtractline 34 from line33 (not lessthan0) 36. MuWply line35 by 20% $7, Smallerof linet7 or line20 38. Add lines17 and 27 39. Amountfrom line14 40. SUbtract line39 from line38 41, Subkact line40 fmhl line 37 42. Multiply line41 by 25% 43. Amountfrom line 14 44. Addnnee 27, 31, 35, and 41 a,_,Subtract line 44 from line43 46, Multiply line45 by 28% 47, Addlines28, 32, 36, 42, and 46 - Alternative Tax 108,08Z00 0.00 108,082.00 513,6_7.00 0.00 5_3,657.00 621,739.00 0.00 621,739.00 621,739.00 o.o0
0.00 0.00
44,823,519.00 513o657.00 513,657.00 108,092.00 0.00 0.00 0.00 513,_7.00 44,309,862o00 43.850.00 43,850.00 _309_86Z00 44,309=862.00 17,5]9,373.00 43,850.00 44,309,862.00 0,00 0.00 0.00 513.6_%00 102,731.00 0.00 _,823,519.00 _,823=519.00 0.00 0.00 0.00 44,823,519,00 44,823,519.00 0.00 o.oo !7,6'22,104.00
KT10003864
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 13 of 18
F-J Nameof Taxpayer: Identification umber: 46 N
T_AURAB TUCKER TotaJ
PENALTY
04/14/2004 4.00.00
SUMMARY OF THE ACCURACY.RELATED
2000 - 20% PENALTYISSUES; Se_on 6662(a) and 6662(b) Ithas beendetermined that the underpayment tax Ghownon iine 5 belowis attributable of to one or moreof the following elementsofthea_cumcy-related penalty:. 1) negligence [ or disregard rulesor regulations, substantial of (2) understatement in,me tax, Or of (3) substantial valuationoverstatement,therefore,an addition tax is imposed to as prey|deal y Se_on 6662(a)of _e [nteme_ b RevenueCode. t. Total tax computed withnon-penalty adjustments and adjustments subject to penaltyunderSection6662(b) 2. Totaltax computed with non-penaltyadjustments only 3, Une I lessline2- Underpaymento which t Se_1on 6562(a) applies 4. Allocable PrepaymentCredi_ (otherthan E|C and Special FuelsCredits includedin linest & 2) 5. Line3 less line4 - Underpayment subiectto penalty 6. Applicable penaltyrate 7. Une 5 multiplied byline6 8. Previously assessed20% Acouracy Penalty 9. Line7 less line 8- 20% Accuracy-related penalty 2000 - 40% PENALTYiSSUES - Section6662(h) ff has beendetermined thatthe underpayment oftax shownon line14 belowis attributable to _ grossvaluationmi._taternent,herefore, an addition tax is imposed provided t to as by Se_ion 6662(h)o_the internal RevenueCode. 10, Totaltax computed withnQn-penaltyadjustments, adjusffneni= subjec_to penaltyunderIRC 6662(a) and adJtmtments subjectto penaltyunderIRC 6662(h) 1I, Totaltax from line i above t2. Line 10 less linet I - Underpayment which to Se_on 6662(h)applies 13.AllocablePrepayment redits(otherthan EIC and C Special FuelsCredits included lineslo & 11) in t4. Ut_ 10 is-as Une11 - Underpayment eubjec_ penalty to 15-Applicable penaltyrate 16. Une 14 multiplied line15 by 17'.Previously assessed 40% AccuracyPenalty 18. Une 16 les_line17 - _% Ao_3uraw-related penalty ' 19. Lineg plusline18- TotalACCURACY-RELATEDPENALTY 15,318,_/1 ].00 2,]03.393.00
_.,t03,393.00
0.00 0.00 0,00
20.00% 0,00 0.00 0.00
2,491,00
15,516,._.0.00 40°.00%
6,206/_8.00
0.00 6,206,4SS.00 6_06,'t88.00
KT10003865
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 14 of 18
Name Of Taxpayer:, ldent_aatJon Number:.
KEITH A & LAUP.AB TUCKE?. To_l
04/14/2004 4.00.00
2000 - ACCURACY RELATED PENALTY-SECT!ON 6662(A)AND 6662(H) (CONTINUED) ADJUSTMENTS TO WHICH THE ACCURACY RELATEDPENALTY APPLIES: PENALTYRATES 20% 40%
SchE-Inc/Loss,Prtnrship/SCorps-l_sssv_rNon-Pss X 39,188,66&00
KT10003866
Case 1:05-cv-00999-MMS
Foun 886A I
Document 24-12
Explanation of Items
Filed 06/12/2006
Rxhibit
Page 15 of 18
Department of the Treasm 7 - Internal Revenue Scmicc
Name of Taxpayer Keith A. & Laura B. Tucker
Year/Period
Ended
Schedule No. or
2000
J
=
You have failed to establish that theioss claimed on your return from Sligo (2000) Company, Inc. in the amount of $39,188,666, or any portion thereof was sustained by you, or any entity in which you held an interest, directly or indirectly, including Sligo(2000) Company, inc., Siigo (2000)LLP, or Epsolon Limited during taxable year 2000. You have likewise failed to establish that even if a $39,188,666 loss was actually sustained by you or an entity in which you held a direct or indirect interest, the loss is allowable as a deduction to you under any provision of the internal Revenue Code. You have also failed to establish that, even if loss was sustained and would otherwise be deductible, any deduction relating to the loss is not specifically limited or disallowed by any provision of the Internal Revenue Code, including without limitation §165, §704(d), §1366(d) or _65. The deduction of $39,188,666 claimed as a loss from the Sligo (2000) Company, Inc. for tax year 2000 is also disallowed because you have failed to establish the basis in the partnership interest in Epsolon Limited held by Sligo (2000) Company, Inc. was greater than zero. You have also failed to establish the basis in any property or disposed of by Epsolon Limited was greater than zero ($0) for purposes of determining gain or loss. The deduction of $39,188,666 claimed as a loss from the Sligo (2000) Company, Inc. for tax year 2000 is likewise disallowed because the entities with reference to which you claimed the loss (Siigo (2000) Company, LLC; Sligo (2000) Company, Inc, and Epsolon Limited) are shams and lack economic substance for Federal Mcome tax purposes. Accordingly, you am not entitled to a deduction in connection with your investment in these entities. in addition, it is determined under § 1.701-2 of the Income Tax Regulations, that Epsolon Limited was formed or availed of in connection with a transaction or transactions in taxable year 2000 a principal purpose of which was to reduce substantially the present value of your federal tax liability in a manner that is inconsistent with the intent of Subchapter K of the internal Revenue Code. Accordingly, underauthofity of §1,701-2 of the income Tax Regulations, it is determined that aittransactions engaged in by the partnership are treated as engaged in directly by the purported partners. Therefore the deduction for loss flowing through to you in connection with Siigo (2000) Company's, lnc's investment in Epsoion Limited is disallowed. Accuracy-Related Penalties It is determined that the adjustments toincome are attributable to a tax shelter for which no substantial authority has been established for the position taken, and for which you have failed to show that you reasonably
.
.
,
=
Fom_886-A o_,_.4-68_
Depamnent
of*he Treasury.
Internal
Revenue
Ser_ce
Page:
KT10003867
Case 1:05-cv-00999-MMS
Department
Document 24-12
of the Treasury - Internal Revenue
Filed 06/12/2006
Service
Page 16 of 18
Fo= 886A
I
Explanation
of Items
Exb_ibit
Year'/Period Ended
Name of Taxpayer Keith A. & Laura B. Tucker
I chedule No. or 2000
believed the position taken on your return was more likely than not the correct treatment of the tax shelter, in addition, all of the, underpayments of tax resulting from those adjustments are attributable to,. at a minimum, (1) substantial understatements of income tax, (2) gross valuation misstatement(s), or (3) negligence or disregarded rules or regulations. You have not shown that you had reasonable cause for any of the resulting underpayments, that you acted in good faith, or that any other exceptions to the penalty app!y, it is therefore determined that, at a minimum, the accuracy-related penalty under Section 6662(a) of the Internal Revenue Code applies to all underpayments of tax attributable to adjustments to income. The penalty shall be imposed on thecomponents of underpayment as follows: A. a 40 percent penalty shall be imposed on the portion of any underpayment attributable to the gross valuation misstatement as provided by Sections 6662(a), 6662(b)(3), 6662(e), and 6662(h) of the Internal Revenue Code. B. a 20 percent penalty shall be imposed on the portion of the underpayment attributable to negligence or disregard of rules and regulations as provided by Sections 6662(a), 6662(b)(1), 6662(c) of the Internal Revenue Code. C. a 20 percent penalty shall be imposed on the underpayment attributable to the substantial understatement of income tax as provided by sections 6662(a), 6662(b)(2), and 6662(d) of the Internal Revenue Code. D. a 20 percent penalty shall be imposed on the underpayment attributable to the substantial valuation misstatement as provided by Sections 6662(a), 6662(b)(3), and 6662(e) of the Internal Revenue Code. It should not be inferred by application of the Accuracy Related Penalty in this notice that fraud penalties will not be seught on any portion of an underpayment determined to be attributable to fraud or that prosecution for criminal offenseswill not be sought under IRC §§ 7201, 7206 or other provisions of federal law if determined to be appropriate;
Vo_ 886-A (R_._8)
Deparmaent
of the Treasury
- Imemal
Revenue
Service
'
Page:
KT10003868
Case 1:05-cv-00999-MMS
Document 24-12
Filed 06/12/2006
Page 17 of 18
ATTACHMENT
TO WAIVER.
STATUTORY NOTICE STATEMENT INTEREST ON DEFICIENCY '
Interest
at the legal rateis
owed upon the amount
due.
KT10003869
Case 1:05-cv-00999-MMS
· " " " "
Document 24-12
-, i "
Filed 06/12/2006
.
Page 18 of 18
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38.31.TURTLE DALLAS. TX
.'75219-4412.
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