- 18 -
settlement has been entered into by respondent in numerous tax
shelter cases. The stipulation of settlement does not support
the inference that respondent asks this Court to draw.
The promotional materials for each tax shelter highlight and
discuss at length the tax benefits derived from the investments.
Each of the tax shelters provided for deferred consideration
using promissory notes that were primarily nonrecourse and
secured by the property upon which the tax shelter was built.
We also consider significant Gelda's conclusions, reached
during the years at issue, as to each of the tax shelter
investments. Gelda was an experienced accountant who had been a
certified public accountant since 1963. He reviewed the tax
shelter documents and attended several of the meetings with
Gerald and Gurian. Gelda concluded that each of the tax shelters
had no economic substance. Gelda concluded that the tax shelters
were solely tax motivated and provided no opportunity for
economic gain. Gelda's conclusion was not equivocal. Gelda
advised Gerald not to invest in the tax shelters, but Gerald
rejected Gelda's advice. We find that the understatements of tax
were attributable to grossly erroneous items.
Petitioner must establish that she did not know and did not
have reason to know that the deductions would give rise to a
substantial understatement. Friedman v. Commissioner, supra at
530. Large deductions on a tax return may give rise to a duty to
inquire as to the propriety of such deductions. Hayman v.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011