- 604 -
In addition, IRA did not show that (1) the disallowed
leasing transaction items were not tax shelter items, and (2) it
reasonably believed, at the time its returns were filed, that its
treatment of the items was more likely than not the proper
treatment. See sec. 1.6661-2(d), Income Tax Regs. Therefore, we
sustain respondent's determinations that IRA is liable for
additions to tax under section 6661 for 1983 through 1988 on the
understatements of tax attributable to the leasing transaction
items.
Similarly, we conclude that IRA failed to establish that it
had substantial authority for its treatment of the disallowed
1985 capital losses (Issue 25). In sustaining respondent's
disallowance of the losses, we found that IRA made no showing
that section 267 was inapplicable or that the losses were bona
fide. Consequently, we sustain respondent's determination that
IRA is liable for an addition to tax under section 6661(a) for
1985 on the understatement attributable to the capital loss
items.
The Court concludes that IRA failed to establish that it had
substantial authority for its treatment of (1) the disallowed bad
debt deductions (Issue 26), (2) the disallowed ordinary losses
(Issue 27), and (3) the disallowed capital losses (Issue 28). As
previously discussed, IRA failed to show that the debts, in fact,
became worthless during 1987. With respect to the 1987 ordinary
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