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that B&L would be unable to make the payments [under the B&L
promissory note] without the bank actually taking repossession of
the [B&L] equipment leaving petitioners without the equipment
that was transferred pursuant to the agreement.”
Based on our examination of the entire record before us, we
find that petitioners have failed to establish that B&L trans-
ferred to Mr. Enyart during the year at issue only the right to
use, and not ownership of, the B&L equipment.7 On that record,
we further find that petitioners have failed to establish that
the value of that equipment was less than $300,000, the value
placed on that equipment by the agreement between B&L and Mr.
Enyart. Accordingly, we sustain respondent’s determination to
increase petitioners’ taxable income for the year at issue by
$300,000.
We turn now to respondent’s determination that petitioners
are liable for 1992 for the accuracy-related penalty under
section 6662(a). Section 6662(a) imposes an accuracy-related
penalty equal to 20 percent of the underpayment of tax resulting
from a substantial understatement of income tax. An understate-
ment is equal to the excess of the amount of tax required to be
7It is significant that during the year at issue Mr. Enyart
used the B&L equipment to capitalize Enyart Company and its
operations. Mr. Enyart thus exercised during the year at issue
dominion and control over the B&L equipment. It is also notewor-
thy that Enyart Company claimed in its tax return for 1992 a
depreciation deduction with respect to the B&L equipment which
was based upon a cost basis of slightly over $300,000.
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