Richard Santulli and Virginia Santulli - Page 40

                                       - 40 -                                         
          present obligation at the end of the relevant deferral period.              
          Accordingly, there was little substance to the risk of loss that            
          the installment notes, in form, presented.  Indeed, the financial           
          structure of both activities was designed to give the impression,           
          but not to reflect the reality, of petitioner's being at risk               
          with respect to the installment notes.  The middle company, Proz,           
          was inserted into each activity solely for tax reasons;                     
          petitioner has failed to convince us that Proz was organized or             
          utilized for any purpose but to avoid the adverse application of            
          section 465.  Our overall impression of both activities is that             
          each is inconsistent with Congress' purpose, writ large in every            
          aspect of section 465, to limit a taxpayer's losses to amounts              
          for which he is really at risk.  The structure and operation of             
          both activities is indicative that petitioner's principal purpose           
          with regard to each was the avoidance of Federal income tax.  See           
          sec. 1.6661-5(b)(2), Income Tax Regs.  Moreover, petitioner has             
          not shown us that his business purpose in entering either                   
          activity exceeded the obvious purposes of tax avoidance.                    
          Petitioner has proposed no findings that, either on a before-tax            
          or after-tax basis, detail his financial expectations.                      
          Petitioner clearly paid very little attention to the activities             
          once they were up and running and his risk of personal liability            
          had been eliminated, or at least postponed.  Petitioner has                 
          stipulated that Sha-Li's bookkeeper did not tell him about the              
          wrong-way flow of funds in the telecommunications equipment                 




Page:  Previous  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  Next

Last modified: May 25, 2011