Nancy Silverman and Estate of Sheldon Silverman, Deceased, Nancy Silverman, Executrix - Page 27

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          attributable to a deduction that had no basis in fact or law; (4)           
          this deduction is a grossly erroneous item; and (5) in accordance           
          with the requirements of section 6013(e)(4), the understatement             
          exceeds the required percentage of Nancy's 1988 income.                     
               Still in dispute is whether Nancy satisfies the following              
          requirements:  (1) The State Coal royalty deduction is an item of           
          Sheldon; (2) at the time the 1981 tax return was signed Nancy did           
          not know, and had no reason to know, of the substantial                     
          understatement of tax; and (3) it is inequitable to hold Nancy              
          liable for the deficiency.  We consider these disputed matters              
          seriatim.                                                                   
          A. Item "of" Sheldon                                                        
               Respondent contends that petitioners have failed to prove              
          that Nancy did not write any checks to buy the interest in State            
          Coal, and thus that petitioners have failed to prove that the               
          State Coal royalty deduction is an item of Sheldon.  Petitioners            
          contend that Nancy played no role in the decision to buy the                
          interest in State Coal, that Nancy's name does not appear on any            
          document purporting to grant an interest or impose an obligation            
          regarding State Coal, and that the total amount required to buy             
          the interest in State Coal was paid by Sheldon from his                     
          individual accounts.                                                        
               We agree with petitioners.                                             







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