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For several years petitioner was employed as manager of the
Wall Street office of Loeb Rhodes & Co., a securities brokerage
firm. Subsequently, he was affiliated with Tyz-All Plastics,
Inc., as an employee, officer, director, and shareholder. His
affiliation with this corporation ended in 1986. Prior to and
during the years at issue, petitioner traded securities for his
own account. The parties have stipulated that he did not engage
in these securities transactions as a dealer.2
During the years at issue petitioner held an interest in
several partnerships and S corporations. In 1986 he and two
other individuals incorporated KRS Restaurant Corp. (KRS) for the
purpose of operating a restaurant. Later that year petitioner
and his two associates formed the Carlisle Inn Joint Venture
(CIJV) and Harrisburg Inn Joint Venture (HIJV) to operate two
motels. Acquisition of the motel and restaurant businesses was
financed in part by loans that petitioner and his associates
guaranteed. The Forms 1065 filed by CIJV and HIJV reflect that a
50-percent interest in each joint venture was owned by an S
corporation called KBS Motel Corp. (KBS). The Forms 1120S filed
2The record contains additional facts concerning
petitioner's background and trading activity that may be relevant
to the reasonableness of petitioner's reliance on his
accountant's substantive tax advice for purposes of sec. 6653(a)
and to the existence of reasonable cause for a waiver under sec.
6661. In view of our disposition of both of these issues,
however, further details would be superfluous, and we have
therefore omitted them.
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