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2. The underpayment in income tax attributable to
petitioner's participation in Resource Reclamation
Associates is a substantial underpayment attributable
to a tax motivated transaction, subject to the
increased rate of interest established under I.R.C.
�6621(c), formerly section 6621(d).
3. This stipulation resolves all issues that relate to
the items claimed on petitioners' 1981 tax return
resulting from petitioner's participation in Resource
Reclamation Associates, with the exception of
petitioners' potential liability for additions to the
tax for a valuation overstatement under I.R.C. �6659
and for negligence under the applicable provisions of
I.R.C. �6653(a).
4. With respect to the issue of the addition to the
tax under I.R.C. �6659, petitioners do not intend to
contest the issue of the value of the Sentinel Recycler
or the existence of a valuation overstatement on the
petitioners' return; however, petitioners preserve
their right to argue that the underpayment in tax is
not attributable to a valuation overstatement within
the meaning of I.R.C. �6659(a)(1), and that even if
I.R.C. �6659 is applicable, the Secretary should have
waived the addition to tax pursuant to the provisions
of I.R.C. �6659(e).
The issues remaining in this case are: (1) Whether
petitioners are liable for the additions to tax for negligence
under section 6653(a)(1) and (2); and (2) whether petitioners are
liable for the addition to tax under section 6659 for
underpayment of tax attributable to a valuation overstatement.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and attached exhibits are incorporated
herein by this reference.
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