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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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