- 3 -
The primary issues for decisions are: (1) Whether
activities of Drake were engaged in for profit under section 183;
(2) whether stated debt obligations of Drake constitute genuine
debt obligations giving rise to deductible interest; and
(3) whether petitioner is liable for the additions to tax.
In the Krause test case opinion, in Vanderschraaf, and in
Karlsson, the first two of the above issues were decided against
the taxpayers, and the third issue was decided against
respondent.
This Court uses show cause procedures in situations similar
to the instant case where the disposition of the pending case may
be affected by a previously decided test case. See Lombardo v.
Commissioner, 99 T.C. 342, 343-345 (1992), affd. sub nom. Davies
v. Commissioner, 68 F.3d 1129 (9th Cir. 1995); Gray v.
Commissioner, T.C. Memo. 1996-525; Finkelman v. Commissioner,
T.C. Memo. 1994-158; Iowa Investors Baker v. Commissioner, T.C.
Memo. 1992-490; Bokum v. Commissioner, T.C. Memo. 1990-21, affd.
992 F.2d 1136 (11th Cir. 1993).
Background
Many of the relevant facts have been stipulated and are so
found. The entire trial record and the testimony and exhibits
admitted into evidence in our test case opinion in Krause v.
Commissioner, supra at 133-167, have been stipulated as part of
the trial record herein. As stated, Krause involved limited
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