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An understatement for purposes of section 6661 does not
include any item for which the taxpayer’s return position was
supported by substantial authority. Sec. 1.6661-3(a)(1), Income
Tax Regs. Substantial authority exists when the weight of
authorities supporting the treatment is substantial in comparison
to the weight of authorities supporting contrary positions. Sec.
1.6661-3(b)(1), Income Tax Regs. A position that is arguable but
fairly unlikely to prevail in court will not be considered as
supported by substantial authority. Id. A case having some
facts in common with the tax treatment at issue does not
constitute authority if the case is materially distinguishable on
its facts. Sec. 1.6661-3(b)(3), Income Tax Regs.
Petitioner does not rely on any cases which, individually or
collectively, qualify as substantial authority for his reporting
position either with respect to the LFI adjustments or the BAC
adjustments. Petitioner cites Campbell v. Commissioner, 868 F.2d
833 (6th Cir. 1989), revg. T.C. Memo. 1986-569, for the
proposition that the “entire economic relationship” of related
companies must be analyzed when making a determination regarding
profit motivation. Petitioner also relies on several cases
holding that the taxpayer had a bona fide profit motive in what
he contends are similar situations. See, e.g., Cornfeld v.
Commissioner, 797 F.2d 1049 (D.C. Cir. 1986); Horner v.
Commissioner, 35 T.C. 231 (1960); Kuhn v. Commissioner, T.C.
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