- 591 -
6661 addition to tax had been asserted by amended pleadings. See
Rule 142(a).
As his Federal income tax returns show, Kanter did not
adequately disclose the relevant facts concerning the tax
treatment of the various items at issue in these cases. There is
and was no substantial authority for his tax treatment of such
issues. He had no reason to believe that his treatment of tax
shelter items was more likely than not the correct treatment. In
this regard, the assignment of income adjustments (Prudential,
Century Industries, Hi-Chicago Trust, CMS Investors), Bea Ritch
Trusts adjustments, Cashmere adjustments, Schedule E computer
leasing adjustments, and the adjustments disallowing losses on
sales of notes receivable and stock to Windy City and MAF for
nominal consideration are items attributable to tax shelters
because they involve entities and arrangements the principal
purpose of which was avoidance or evasion of Federal income tax.
See United States v. Dahlstrom, 713 F.2d 1423 (9th Cir. 1983).
The evidence affirmatively shows that Kanter did not have
substantial authority for failing to report the assigned income
at issue or substantial authority for his tax treatment of other
items at issue. Therefore, except as otherwise provided in
stipulations of settled or conceded issues, we sustain
respondent's determination that the entire underpayment of income
tax for each of the years 1982 through 1984 and 1986 through 1988
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