- 605 -
and capital loss items, IRA failed to make any showing that (1)
the purported sales were bona fide transactions, and/or (2) that
section 267 was inapplicable. Moreover, with respect to the
purported sales of certain assets made to MAF, IRA also failed to
show that (1) the loss items were not tax shelter items, and (2)
it reasonably believed that its treatment of the items was more
likely than not the proper treatment. Consequently, we sustain
respondent's determination that IRA is liable for an addition to
tax under section 6661(a) for 1987 on the understatement from the
disallowed bad debt deduction, ordinary losses, and capital
losses items.
Finally, we conclude that IRA failed to establish that it
had substantial authority for its treatment of the disallowed
1988 Decision Holdings Form 4797 loss (Issue 23). IRA did not
show that the TG limited partnership had an adjusted basis of
$1,091,641 in the assets it transferred to Decision Holdings.
Moreover, IRA did not show that (1) this loss item was not a tax
shelter item, and (2) it reasonably believed its treatment of the
item was more likely than not the proper treatment. Therefore,
we sustain respondent's determination that IRA is liable for an
addition to tax under section 6661(a) for 1988 on the
understatement attributable to the disallowed Form 4797 loss
item.
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