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he tried to resolve it. When Mutual Life refused to honor the
insurance policy on Burke’s life because of Burke’s failure to
disclose his adverse medical history, petitioner may well have
had grounds for reformation or rescission of the buy-sell
agreement. Petitioner was faced with a dilemma over whether he
should honor what he deemed to be his continuing obligation to
his old friend and coventurer, Burke, or play hardball and
protect his own economic interests at the expense of Burke’s
family. Petitioner tried to find a middle ground that would
allow full payment of the $150,000 to Burke’s heirs, while
reducing the adverse tax consequences to INI and himself.
Petitioner’s chosen path led him into a brier patch of conflict
between the estate’s and his interests that he attempted to cut
through at the expense of the fisc. Notwithstanding petitioner’s
conflicted motives, the intent underlying his conduct amounted to
tax fraud. Petitioner is liable for the addition to tax for
fraudulent understatement under section 6653(b).
INI
Respondent having issued a notice of deficiency to INI
subsequent to its involuntary dissolution, petitioner’s filing of
the petition on behalf of INI necessarily also occurred
subsequent to the dissolution. On June 13, 1995, more than 1
year after filing the answer to INI’s petition, and just 1 week
before the date for which the case had been set for trial,
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