Theodore A. Andros and Joan B. Andros - Page 2

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          respective amounts of $983,966.13 and $2,338.90, and additional             
          interest for 1980 pursuant to section 6621(c).1                             
               Pursuant to an amended answer, respondent asserts that                 
          petitioners are liable for additional interest for 1976 pursuant to         
          section 6621(c), and additions to tax for 1976 and 1980 pursuant to         
          section 6653(a) in the respective amounts of $49,198 and $117.              
               This case involves petitioner Theodore A. Andros' investment           
          in an options-spreads and futures-trading partnership, Tandrill             
          Associates (Tandrill).  It is part of the Arbitrage Management tax          
          litigation project.  The deficiencies result from respondent’s              
          disallowance of Theodore A. Andros’ allocable share of partnership          
          losses from: (1) 1979 option spread transactions involving                  
          Government securities, and (2) 1979 and 1980 futures transactions           
          involving commodities and Government securities.  The deficiency            
          for 1976 results from respondent's reduction in petitioners' net            
          operating loss carryback to that year from 1979.                            
               The issues for decision are: (1) Whether respondent properly           
          disallowed petitioners’ allocable share of Tandrill’s losses for            
          1979 and 1980, pursuant to section 165(c)(2); the resolution of             
          this issue turns on whether the underlying partnership transactions         


               1    Pursuant to the Tax Reform Act of 1986, Pub. L. 99-514,           
          sec. 1151(c)(1), 100 Stat. 2744, former sec. 6621(d) was                    
          redesignated as sec. 6621(c).                                               
                    Unless otherwise indicated, all section references are            
          to the Internal Revenue Code in effect for the years in issue.              
          All Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  




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