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Mr. Acquaviva intended to reinvest the proceeds from the
condemnation into another venture with Mr. DiMisa. In the fall
of 1987, Mr. Acquaviva and Mr. DiMisa sought legal advice from
Mr. Gannette regarding the 1986 condemnation gain. Mr. Gannette
advised the partners that in seeking the benefits of section
1033, HGCC would be regarded as an entity separate from its
partners, and, as such, it was incumbent upon HGCC, not the
partners individually, to acquire and hold replacement property
in its trade or business. Mr. DiMisa, however, decided not to
enter into another venture with Mr. Acquaviva through HGCC; he
decided to report his share of the taxable income related to the
1986 condemnation. Thus, the 1986 condemnation proceeds were
never reinvested by HGCC. Mr. Defalco prepared an amended 1986
individual income tax return which reported Mr. Acquaviva's
proportionate share of HGCC's gain from the 1986 condemnation.
Mr. Defalco delivered the amended return to Mr. Acquaviva for
filing. Mr. Acquaviva never filed this amended return. Mr.
Acquaviva explained that he could not afford to pay his share of
the tax liability because he had used the condemnation proceeds
to, among other things, purchase other properties in
contemplation of either contributing or selling them to HGCC.
Mr. Acquaviva never told petitioner of his discussions with Mr.
DiMisa, Mr. Defalco, or his tax attorney concerning the
involuntary conversion, nor did he discuss with her his decision
to ignore the advice of his professional advisers. Petitioner
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