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          ended February 28, 1991, as the elimination of OIP's 50-percent              
          interest in Sandlake and the realization by OIP of a deferred                
          gain under section 1033 in the amount of $819,566.                           
          Notice of Deficiency                                                         
               In the notice of deficiency (notice) issued to petitioners,             
          respondent determined, inter alia, that the aggregate gains                  
          realized by OIP, and not just the boot reported by petitioners,              
          on its sales of lots 11 and 12 and OIP's 25-percent interests in             
          lots 14 and 15 during the taxable year ended February 28, 1991,              
          must be recognized and included in petitioners' consolidated                 
          return for that year because those gains do not qualify for                  
          nonrecognition treatment under section 1031.  Respondent also                
          determined in the notice that the gain realized by OIP as a                  
          result of the condemnation transaction must be recognized and                
          included in petitioners' consolidated return for the taxable year            
          ended February 28, 1991, because that gain does not qualify for              
          nonrecognition treatment under section 1033.                                 
               Respondent further determined in the notice, inter alia,                
          that petitioners are liable for all the taxable years at issue               
          except the taxable year ended February 28, 1993, (1) for addi-               
          tions to tax under section 6651(a)(1) for failure to file timely             
          their consolidated returns for those years and (2) for accuracy-             
          related penalties under section 6662(a) because of negligence or             
          disregard of rules and regulations.                                          
                                       OPINION                                         
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