Patrick E. Catalano - Page 16

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          consequences of doing so.  Petitioner chose to employ the                   
          corporate form, and “having elected to do some business as a                
          corporation, he must accept the tax disadvantages.”  Higgins v.             
          Smith, 308 U.S. 473, 477-478 (1940).  He also chose to obtain the           
          use of boats for his business through a leasing transaction, and            
               while a taxpayer is free to organize his affairs as he                 
               chooses, nevertheless, once having done so, he must                    
               accept the tax consequences of his choice, whether                     
               contemplated or not and may not enjoy the benefit of                   
               some other route he might have chosen to follow but did                
               not. * * *  [Commissioner v. National Alfalfa                          
               Dehydrating & Milling Co., 417 U.S. 134, 149 (1974);                   
               citations omitted.]                                                    
               We hold that petitioner is liable for the deficiencies                 
          determined by respondent7 and cannot exclude the boat lease                 
          income from his individual returns.                                         
               We must additionally decide whether petitioner is liable for           
          accuracy-related penalties under section 6662(a) and (b)(1) for             
          each of the years at issue.  These sections provide that if any             
          portion of an underpayment of tax is attributable to negligence             
          or disregard of rules or regulations, there shall be added to the           
          tax an amount equal to 20 percent of the underpayment which is so           
          attributable.  The term “negligence” includes any failure to make           
          a reasonable attempt to comply with the statute, and the term               

               7 It appears, however, that respondent may have disallowed a           
          greater amount than was actually deducted as boat rental expense            
          on the corporation’s return for its taxable year ended May 31,              
          1992.  We expect the parties to address this matter in their Rule           
          155 computations.                                                           

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