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Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
The issue for decision is whether Spencer Medical Associates
has a duty of consistency in its treatment of a tax shelter
investment on its Federal income tax returns for 1983 and 1990.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference. At the
time the petition was filed, Spencer Medical Associates (Spencer
Medical) was a Maryland general partnership with its principal
place of business in St. Mary's, West Virginia.
Spencer Medical was formed on November 18, 1983. Spencer
Toyota, Inc., now known as Automotive Ventures, Inc.,
(petitioner) was the tax matters partner for Spencer Medical in
1990. Spencer Toyota, Inc., was also the tax matters partner for
Spencer Medical Associates II, a Texas general partnership.
On December 1, 1983, Spencer Medical entered into a contract
with Coral Sociedade Brasileira de Pesquisas e Desenvolvimento
Ltda. (Coral) (the 1983 Coral contract) under which Coral was to
conduct medical research and development with respect to four
specified reagents. The total consideration to be paid by
Spencer Medical to Coral as stated in the 1983 Coral contract was
2,873,600,000 Brazilian cruzeiros (Cr$), which amount was
equivalent on December 1, 1983, to $3.2 million U.S. dollars
(US$). One-eighth of the stated consideration was paid in U.S.
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