- 41 -
activity because she believed that "he had more important things
to be concerned with". The parties to the two activities missed
payments for months on end. For the reasons stated, we are
convinced that both activities constitute tax shelters within the
meaning of section 6661(b)(2)(C)(ii).
Because both activities constitute tax shelters, petitioner
cannot rely on substantial authority unless, at the time the 1982
and 1983 returns were filed, he reasonably believed that the tax
treatment claimed was more likely than not the proper tax
treatment. See sec. 6661(b)(2)(C)(i)(II); sec. 1.6661-5(a),
Income Tax Regs. Petitioner testified that, in both activities,
he acquired the equipment in question through Proz in order to
satisfy his and certain of his advisers' concerns regarding
section 465. We have no doubt that petitioner and his advisers
considered the tax results to petitioner of both activities.
Nevertheless, there is no evidence for us to find that petitioner
analyzed the pertinent facts and authorities and, in the manner
contemplated in section 1.6661-5(d)(1), Income Tax Regs.,
reasonably concluded that there was a greater than 50-percent
likelihood that the tax treatment of the claimed losses from
either the computer equipment activity or the telecommunications
activity would be upheld in litigation. Also, there is no such
unambiguous opinion from a tax adviser. See sec. 1.6661-5(d)(2),
Income Tax Regs. Accordingly, we find that petitioner did not
reasonably believe when petitioners filed the returns in question
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