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cases with respect to deficiencies in and additions to tax
resulting from participation in Encore. In each case, and on all
issues, the Court held in favor of the Government. Each case was
subsequently affirmed by the Court of Appeals for the Ninth
Circuit.
Petitioners were among a large number of persons who
invested in Encore and who claimed credits, deductions, and
losses with respect thereto that were disallowed by respondent.
For purposes of judicial economy and efficiency, and to resolve
common issues, Wolf v. Commissioner, supra, was selected as a
test case. We rendered an opinion in Wolf and held that Encore's
underlying lease transaction was a sham entered into without the
intent to make a profit, in which tax considerations were
paramount.
More specifically, in Wolf v. Commissioner, supra, this
Court held: (1) The taxpayers were not entitled to claimed
deductions and investment tax credits related to their
participation in Encore; (2) the taxpayers’ underpayments for the
years at issue were due to negligence or intentional disregard of
rules and regulations, and as a result, they were liable for the
1(...continued)
Commissioner, T.C. Memo. 1991-212, affd. 4 F.3d 709 (9th Cir.
1993); Feldmann v. Commissioner, T.C. Memo. 1991-353, affd.
without published opinion 5 F.3d 536 (9th Cir. 1993); Garcia v.
Commissioner, T.C. Memo. 1991-451, affd. without published
opinion 5 F.3d 536 (9th Cir. 1993).
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