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In conclusion, we noted that tax benefits of Mr. Resser's
option spread strategy "so far outweigh[ed] the economic profit
potential" that we could not accept Mr. Resser's contention that
he was primarily motivated by the desire to earn a profit. Id.
Consequently, we sustained respondent's determination and
disallowed the claimed losses from the account QRF TDY stock
option transactions.
With respect to the section 6661 addition to tax, we held
that Mr. Resser's principal purpose for the stock option trading
in account QRF was the avoidance of Federal income tax, and,
therefore, the trading activity met the section 6661(b)(2)(C)
definition of a "tax shelter". Because we concluded that Mr.
Resser had no substantial authority for the tax treatment of his
TDY trading in taxable year 1982, we sustained respondent's
determination. We likewise sustained respondent's imposition of
increased interest under section 6621(c) because Mr. Resser's
stock option spread transactions were not entered into for profit
and thus any underpayment based on those transactions was
attributable to a tax-motivated transaction.
OPINION
As mandated by the Court of Appeals for the Seventh Circuit,
we must decide whether the claimed losses generated by Mr.
Resser's account QRF stock option spread transactions are
"grossly erroneous items", as required by section 6013(e)(1)(B)
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