Investment Research Associates - Page 556




                                       - 596 -                                         
               With respect to the 1987 capital gains and losses adjustment            
          of $3,097,750, included therein is the disallowance of losses                
          claimed on the sale of notes receivable, stock, and partnership              
          interests to Windy City and MAF for nominal consideration.                   
          Kanter admitted that the purpose of these sales was to establish             
          losses for tax purposes.  As discussed in the disallowance of                
          these losses, the claimed losses were based on sham transactions             
          wholly lacking in economic substance.  Consequently, any                     
          underpayments resulting from these adjustments are attributable              
          to tax-motivated transactions within the meaning of section                  
          6621(c).                                                                     
          Issue 37.  Whether IRA Is Liable for the Section 6651(a)(1)                  
          Addition to Tax for 1980                                                     
                                       OPINION                                         
               In the notice of deficiency, respondent determined that IRA             
          was liable for an addition to tax under section 6651(a)(1) equal             
          to 15 percent of the deficiency for filing a delinquent return               
          for 1980.                                                                    
               Section 6651(a)(1) provides that if there is a failure to               
          file a return on the date prescribed therefor (determined with               
          regard to any extension of time for filing), unless it is shown              
          that such failure is due to reasonable cause and not due to                  
          willful neglect, there will be added to the amount required to be            
          shown as tax on such return 5 percent of the amount of such tax              
          if the failure is not for more than 1 month, with an additional 5            





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