Johnston

Facts

Thomas E. Johnston, on his own behalf and as the successor-in-interest to his late wife’s estate, appeals the order of the tax court granting summary judgment for the Commis- sioner of Internal Revenue (“the Commissioner”). Beginning in the 1970s, Johnston conducted a real estate business in Southern California. His business was successful for many years, but, in 1988, it turned for the worse when the local real estate market crashed. Consequently, Johnston reported large tax losses for most of the tax years between 1988 and 1995, including the three years at issue here. Disputing these claimed losses, the Commissioner assessed tax deficiencies of $1,546,160 for 1989, $289,396 for 1991, and $341,908 for 1992, plus penalties.1 1 The amount and type of penalties, which are immaterial here, are stated in the tax court’s opinion. See Johnston v. Comm’r, 122 T.C. 124, 125 (2004). JOHNSTON v. CIR 10653 In a letter dated January 31, 2003, Johnston offered to “re- solve all adjustments at issues [sic] in the matters” docketed for tax years 1989, 1991, and 1992 for $105,000, or $35,000 per year. Johnston designated his offer as a “qualified offer” under I.R.C.…