Investment Research Associates - Page 545




                                       - 586 -                                         
               Our findings and conclusions with respect to the following              
          issues clearly show that portions of Kanter's underpayments of               
          income taxes were attributable to negligence or intentional                  
          disregard of rules or regulations to the extent the 1986 through             
          1989 tax years are involved:  (1) Commitment fees received by                
          Century Industries (Issue 2); (2) income of the Bea Ritch Trusts             
          (Issue 4); (3) interest deduction for 1986 (Issue 17); and (4)               
          capital gains and losses (Issue 21).  Also, Kanter conceded some             
          adjustments but failed to address the additions to tax for                   
          negligence with respect thereto.  Unlike the underpayments                   
          attributable to fraud with respect to the "Prudential Issues" or             
          "The Five", only the negligence additions to tax apply to these              
          issues.  See sec. 6653(a)(2); sec. 6653(b)(2).                               
          Issue 34.  Whether the Kanters Are Liable for the Section 6659               
          Addition to Tax for 1981                                                     
                                       OPINION                                         
               This issue relates to the Kanters' liability for the                    
          addition to tax under section 6659 for substantial valuation                 
          overstatement with respect to a $4,283 loss claimed from GLS                 
          Associates on their 1981 income tax return.  We sustained                    
          respondent's disallowance of this loss (Issue 13).  On their 1981            
          return, the Kanters also claimed an investment interest expense              
          deduction relating to GLS Associates in the amount of $45,095,               
          which respondent disallowed in the notice of deficiency.  In a               
          Stipulation of Settled Issues dated April 12, 1990, the Kanters              





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