-56- Illingworth was involved with other partnerships that realized tax losses in all years for which their results are in evidence. The partnerships had similar trading patterns to Tandrill. This is another indication that Mr. Illingworth’s “expertise” as a trader lay in his ability to produce tax losses for his partners. Conclusion We conclude that Tandrill did not enter into the options and futures transactions with a primary profit motive. Thus, respondent properly disallowed petitioners’ allocable share of Tandrill’s 1979 and 1980 losses under section 165(c)(2). Issue 2. Section 6653(a) Additions to Tax The second issue is whether petitioners are liable for additions to tax for negligence or intentional disregard of rules or regulations for 1976 and 1980. For these years, respondent has the burden of proving petitioners’ negligence or disregard of rules and regulations because it is a new matter raised in respondent’s amended answer. Rule 142(a). 45(...continued) activities is unclear. As president of Manhattan Metals, he had ultimate responsibility for Tandrill’s trading. However, the extent to which Mr. Illingworth personally determined which trades Tandrill should make, what trading strategies Tandrill should adopt, or the degree of his oversight is uncertain. For example, he apparently delegated all responsibility for the options trading to Messrs. Willensky and Sherman of Wilcap Advisors, and for the futures trading to Mr. Weiss, a Manhattan Metals employee. And Mr. Illingworth testified that Mr. Weiss did not discuss his trades with Mr. Illingworth.Page: Previous 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 Next
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