Alfred E. Gallade - Page 22

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          is whether respondent has abused her discretion in not waiving              
          the addition to tax.  Mailman v. Commissioner, 91 T.C. 1079, 1083           
          (1988).  If we conclude that respondent's discretion was                    
          exercised arbitrarily, capriciously, or without a sound basis in            
          fact, we will not sustain the determination.  Karr v.                       
          Commissioner, 924 F.2d 1018, 1026 (11th Cir. 1991), affg. Smith             
          v. Commissioner, 91 T.C. 733 (1988).                                        
               We have found that petitioner met with his sons (former GCI            
          employees) to discuss the future of the Plan.  In May 1985, when            
          petitioner determined that his distribution could benefit GCI’s             
          operations, he took several steps to assure that the assignment             
          would comply with the law.  First, petitioner sought the advice             
          of his C.P.A., Mr. Zdonek, and an actuary, Mr. Salisbury.  Mr.              
          Salisbury then formally contacted Ms. Nappier of the PBGC, who              
          stated in writing that she believed petitioner’s “waiver” would             
          be fine.  To comply with GCI’s filing requirements, petitioner              
          caused his wholly owned company to file Forms 5310 with                     
          respondent and the PBGC.                                                    
               In August 1985, Mr. Salisbury informed petitioner that he              
          believed that temporary IRS regulations indicated that, with the            
          Plan’s termination date, the Plan would not be subject to the new           
          survivor annuity requirements.  Based on the above advice, GCI              
          adopted the resolution where petitioner agreed to waive his                 
          benefits under the Plan.  Finally, in January 1986, the PBGC                

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