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recovery (EOR) technology for the recovery of oil and natural
gas.
After settlement of some issues, the primary issues in these
cases are: (1) Whether activities of Cromwell were engaged in
for profit under section 183; (2) whether stated debt obligations
of Cromwell constituted genuine debt obligations giving rise to
deductible interest; and (3) whether petitioners are liable for
increased interest under section 6621(c) and additions to tax
under sections 6653(a)(1) and (2) and 6661.
In the Krause test case opinion and in Vanderschraaf v.
Commissioner, T.C. Memo. 1997-306, the first two of the above
primary issues were decided against the taxpayers, and the third
of the above primary issues was decided in favor of respondent as
to the increased interest and in favor of the taxpayers as to the
additions to tax.
This Court uses show cause procedures in situations similar
to the instant cases where the disposition of pending cases 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).
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