Robert Gottsegen - Page 3

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          to petitioner's participation in the Plastics Recycling Program.            
          The stipulation states in pertinent part as follows:                        
               1.  Petitioner is not entitled to any deductions,                      
               losses, investment credits, business energy investment                 
               credits or any other tax benefits claimed on his tax                   
               returns as a result of his participation in the                        
               Plastics Recycling Program.                                            
               2.   This stipulation resolves all issues that relate                  
               to the items claimed on petitioner's tax returns                       
               resulting from his participation in the Plastics                       
               Recycling Program with the exception of petitioner's                   
               liability for additions to the tax under the applicable                
               provisions of Section 6662(a).                                         
               After the foregoing stipulation, the issue remaining for               
          decision is whether petitioner is liable for accuracy-related               
          penalties under section 6662(a) for 1989 and 1990.  The                     
          resolution of this issue turns on whether, for 1989, a                      
          substantial valuation misstatement or a substantial                         
          understatement of income tax exists for such year, or whether,              
          for 1989 and 1990, petitioner was negligent.                                
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated, and they are so                
          found.  Petitioner resided in Bermuda at the time that his                  
          petition was filed with the Court.                                          
          A.   The Plastics Transactions                                              
               The present cases involve petitioner's purchase of a                   
          Sentinel expanded polyethylene (EPE) recycler in 1981 and two               
          Sentinel expanded polystyrene (EPS) recyclers in 1982.                      







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