- 19 -
adjusted basis or valuations claimed on the returns and that such
claims were made in good faith. Respondent's refusal to waive a
section 6659 addition to tax is reviewable by this Court for
abuse of discretion. Krause v. Commissioner, 99 T.C. at 179.
Petitioner argues that he arrived at his valuation of the
tapes by virtue of his relying on Geldbach and Andrews, and on an
appraisal prepared by McGraw-Hill, in addition to representations
made in the offering materials. He contends that such reliance
was reasonable, and, therefore, respondent should have waived the
section 6659 addition to tax. We have found that petitioner's
reliance on the above was not reasonable because neither Geldbach
nor Andrews had expertise in continuing medical education, the
offering materials contained numerous disclaimers and stated that
prior similar ventures had not been as successful as predicted,
and petitioner did not perform any independent investigation into
the history, experience, credibility, reputation, or finances of
MSA or its promoters.
Petitioners did not have a reasonable basis for the adjusted
base or valuation claimed on their 1983 return with respect to
their investment in MSA. The record does not establish an abuse
of discretion on the part of respondent with respect to the
addition to tax under section 6659. In addition, the record
fails to indicate that petitioners ever requested a waiver from
respondent pursuant to section 6659(e) until briefing after
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