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reason to know and remanded the matter for our consideration of
whether it would be equitable to hold her liable with respect to
the grossly erroneous leasing transaction deductions. Friedman
v. Commissioner, 53 F.3d 523 (2d Cir. 1995), affg. in part and
revg. and remanding in part T.C. Memo. 1993-549.
This case involves 5 taxable years, and the losses claimed
for the leasing transaction occur in all years, whereas the
capital loss item occurs in only one year, 1983. The parties'
computations agree with respect to the 1981, 1982, 1984, and 1985
tax years; i.e., petitioner would be relieved of income tax
liability and all additions to tax because the leasing loss was
the sole adjustment. With respect to 1983, petitioner reaches
the same result as in the other 4 years (no liability), and
respondent computes a $53,307.36 income tax liability and
additions to tax in the amounts of $47,640.233 and $13,326.84
under sections 6653(a) and 6661, respectively. This opinion
addresses the parties' differing approaches to the Rule 155
computation.
3 For 1983, the sec. 6653(a)(1) addition to tax set forth in
the notice of deficiency was $5,982.24, without considering sec.
6653(a)(2), which provided for 50 percent of the interest due on
the underpayment. At the time of assessment (Mar. 28, 1994),
following the entry of decision based on T.C. Memo. 1993-549, the
addition to tax had increased to $106,925.26, including the 50-
percent interest addition. After proposed abatement for the
portion not attributable to the capital loss, the sec. 6653(a)(1)
and (2) addition amounts to $47,640.23.
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