893 F.2d 69 (4th Cir. 1990), 89-2675, Korangy v. C.I.R.

Docket Nº:89-2675.
Citation:893 F.2d 69
Party Name:Amile A. and Parvane S. KORANGY, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Case Date:January 02, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 69

893 F.2d 69 (4th Cir. 1990)

Amile A. and Parvane S. KORANGY, Petitioners-Appellants,



No. 89-2675.

United States Court of Appeals, Fourth Circuit

January 2, 1990

Argued Oct. 30, 1989.

John Hardin Young (Porter, Wright, Morris & Arthur; Michael A. Fracassi, Washington, D.C., on brief), for petitioners-appellants.

Michael James Roach (Shirley D. Peterson, Asst. Atty. Gen.; Gary R. Allen, Gilbert S. Rothenberg, Tax Div., U.S. Dept. of Justice, Washington, D.C., on brief), for respondent-appellee.

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Before WILKINS, Circuit Judge, WINTER, Senior Circuit Judge, and MOTZ, District Judge for the District of Maryland, sitting by designation.

MOTZ, District Judge:

Amile and Parvane Korangy appeal from a decision of the Tax Court denying their motion to modify or vacate a Stipulation of Agreed Adjustments into which they entered with the government. In the stipulation the Korangys agreed that there was a deficiency in the amount of $270,415.00 in their personal income tax for the taxable year 1982. They now contend that they made an error in compiling a list which was used during the negotiations leading to the stipulation and that the stipulation therefore should not be enforced against them.


The Internal Revenue Service conducted an investigation of the Korangys. During the investigation the IRS found, inter alia, unexplained bank deposits of $637,647.00 made by the Korangys during the 1982 tax year. The IRS issued a notice of deficiency which the Korangys challenged by filing a petition in the Tax Court.

As the trial date approached, counsel for the Korangys entered into settlement negotiations with the government, conceding that some of the bank deposits represented unreported income but insisting that others did not. During the negotiations a list was prepared by the Korangys' lawyers and accountants which broke down the IRS's total of unexplained deposits into deposits which the Korangys conceded to be "unexplained" and those which they asserted were satisfactorily explained.

One of the deposits, in the amount of $227,987.50, related to a transfer which had purportedly been made by the Korangy Radiology Associates, Inc. Pension Plan to one of the Korangys' accounts for the purpose of permitting the Plan to purchase an interest in certain property located in Indian River County, Florida. The Korangys were contending that this deposit was "explained," and, according to them, it should have been placed under the category of "explained" deposits on the list which their attorneys and accountants prepared. Subsequently, according to the Korangys, they and the government engaged in deposit-by-deposit negotiations, and during the course of these negotiations they conceded that the $227,987.50 deposit did reflect reportable income. Therefore, it was deducted from the "explained deposit" category. However, the Korangys allege, the deposit had inadvertently been omitted from the "explained deposits" category in the first instance. Thus, they argue that it was counted twice in determining their taxable income, and this error resulted in an overstatement of the tax deficiency. 1

The government denies that the parties engaged in deposit-by-deposit negotiations. Rather, it asserts that the Korangys did not submit sufficient information to the appeals officer handling the case to permit a detailed...

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