Problem
I. The Appeals Office and the taxpayer reach a settlement in a tax case. A Form 870-AD is executed by the taxpayer and is accepted on behalf or the Commissioner of Internal Revenue. The taxpayer pays the tax and interest in full. The taxpayer, still believing that he deserves a better deal, comes to you and asks that you file on his behalf a claim for refund to recover the full tax and interest paid with the Form 870-AD. Should you file the claim for refund for the taxpayer?
II. Leroy Loser's return has been examined and the IRS has disallowed losses claimed in his chinchilla farm operation as an activity not entered into for profit. Leroy wants you to appeal the Revenue Agent's determination. He explains to you that his intention in entering into the venture was to make a profit and that it was only bad luck and poor economic conditions that caused him to show a loss for the last six years. During the entire six-year period, Leroy was also a highly paid consultant to a nationwide engineering firm.
i. Should Leroy attend the conference with the Appeals Officer "to help establish the profit motive?"
ii. If not, how else can he "prove" his profit motive?
III. You have appealed a determinations by the SB/SE that gain on various installment sales of real estate constitutes ordinary income rather than capital gain. Upon careful review of the case law, you conclude that tax payer has an overall 50% chance of prevailing in court. Explain how would you present your case to the Appeals Officer. What approach you utilize to guarantee that the SB/SE does not subsequently raise the same issue with respect to future installment payments on said sales.