Gregory W. McKay Plaintiff-Counter-Claimant-Appellant v. United States of America, Defendant-Counter-Claimant-Appellee

This appeal concerns a series of events that began twenty years ago. Pro se appellant Gregory W. McKay seeks to overturn a judgment of $207,969.52 for back taxes, interest, and penalties. This judgment has its source in the appellant’s federal personal income tax returns for the years 1972 and 1973. Appellant attacks the judgment on two grounds: (1) that the district court erred by finding that appellant underpaid his taxes for the years in question, and (2) that the penalties associated with the tax underpayments which were included in the judgment ($58,423) were discharged in appellant’s bankruptcy, and should not have been included in the final judgment. The first has no merit, but the second does. Therefore, we affirm as to the first ground and reverse as to the second.

I.

FACTS AND PROCEEDINGS BELOW

Commencing in 1971, appellant invested in and operated a number of real estate partnerships and companies. He timely filed and paid his 1971, 1972, • and 1973 taxes. Thereafter, appellant filed refund claims for taxes paid in those years. These claims were based on an alleged net operating loss deduction incurred in 1974, and were consistent with regulations then in effect. The…