- 12 -
he termed in his testimony a "nice extra". Petitioner was
willing to take advantage of this nice extra to reduce his tax
liability despite the numerous warnings in the Memorandum. This
Court has referred to that nice extra as a subterfuge. We find
that the Memorandum advertised improbable tax advantages with
respect to the charitable contribution.
Petitioner actually paid $7,500 in 1985 and $12,018.73 in
1986 for his partnership share. For those 2 years, he deducted
$16,277 and $15,626 as cash contributions on the Schedules A of
the respective returns. At his tax bracket, these specific
deductions almost paid for his investment in the partnership
during the 2 years in issue.
Moreover, petitioner is a sophisticated businessman who, on
his own, had reason to doubt whether the charitable contribution
deductions were proper deductions. Instead, petitioner
admittedly considered the deductions a little extra tax benefit.
We believe petitioner knew that the deductions were at the least
problematic. For all the foregoing reasons, we find that
petitioner is liable for the negligence additions to tax for 1985
and 1986.
We turn to the question of whether petitioner is liable for
the addition to tax for a substantial understatement of income
tax under section 6661(a) for 1985. Section 6661(a) provides for
an addition to tax in the amount of 25 percent of any
underpayment attributable to a substantial understatement of tax.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011