- 598 -
Respondent, on the other hand, contends that IRA failed to
establish that it is not liable for the section 6653(a) addition
to tax.
We conclude that IRA is liable for the addition to tax under
section 6653(a) for 1980, 1982, 1983, 1984, 1985, 1986, 1987, and
1988, with respect to its underpayments from the equipment
leasing transactions adjustments (Issue 22). As previously
noted, Mallin, a tax attorney and an individual with considerable
experience in the leasing field, brokered the transactions and
recommended them to IRA and Kanter. Kanter further testified
that, in having IRA invest in these transactions, he relied upon
Mallin. However, it is important to note that Mallin was not
acting as an outside, disinterested, and independent adviser to
IRA, because he was paid a commission by the leasing company
based on IRA's cash investment in each transaction. Indeed,
during the course of Mallin's testimony, he acknowledged that he
was acting as a broker, not as a tax attorney, in brokering these
and other leasing transactions. Moreover, the Court did not
accept Mallin's conclusory claims regarding the transactions'
profit potential and economic substance. Also, no offering
memorandum or prospectus was prepared and furnished to IRA with
respect to the subject transactions. IRA failed to establish
that a reasonable inquiry was made into the merits of the
deductions and credits prior to its investment in these
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