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Respondent also determined that petitioners are liable for
increased interest under section 6621(c) for the portion of the
underpayment attributable to tax-motivated transactions.
After concessions, we must decide the following issues:
1. Whether petitioners may deduct an amount equal to their
cash investment in Century Concepts, Inc., in the years in issue.
We hold that they may not.
2. Whether petitioners are liable for additions to tax for
the years in issue for: (a) Negligence under section 6653(a),
and (b) valuation overstatement under section 6659. We hold that
they are.
3. Whether petitioners are liable for increased interest
on substantial underpayments due to tax-motivated transactions
under section 6621(c) for the years in issue. We hold that they
are.
Petitioners concede that they are not entitled to claim the
investment tax credit for their investment in Century Concepts.
References to petitioner are to Bevel M. Hoffpauir. Section
references are to the Internal Revenue Code in effect for the
taxable years in issue. Rule references are to the Tax Court
Rules of Practice and Procedure.
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