- 16 -
approximated $900,000, their alleged lack of interest in the tax
benefits generated by MSA is unconvincing.
We are also unpersuaded by petitioners' argument that
because of his busy law practice and heavy responsibilities with
the MGM disaster litigation, he could not be expected to spend
time investigating the MSA partnership. Petitioner claims that
he hired a financial planner so that he would not have to spend
his time or resources investigating potential investments. In
our view, despite his numerous responsibilities, petitioner is
required to exercise due care with respect to his Federal income
taxes. Wilson v. Commissioner, T.C. Memo. 1995-525.
Based on the foregoing we find that petitioner failed to
establish that he acted in a reasonable and prudent manner when
he invested in MSA. Accordingly, we find petitioners were
negligent in claiming the loss and credits on their returns for
the taxable years at issue. Respondent's determination of the
additions to tax under section 6653(a) for 1980 and 6653(a)(1)
and (a)(2) for 1981, 1982, and 1983 is sustained.
We next consider whether petitioners are liable for
additions to tax under section 6659. Under this section, a
graduated addition to tax is imposed when an individual has an
underpayment of tax that equals or exceeds $1,000 and "is
attributable to" a valuation overstatement. Sec. 6659(a), (d).
A valuation overstatement exists if the fair market value (or
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011