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The issues presented are: (1) Whether losses claimed by
petitioner are subject to the passive activity loss limitations
under section 469 and (2) whether petitioner is liable for the
accuracy-related penalty under section 6662(a). Unless otherwise
indicated, all section references are to the Internal Revenue
Code in effect for the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in Stillwater, Oklahoma, at the time of filing
the petition. He owned real estate investment properties,
interests in various business entities, gasoline-hauling
trailers, and an airplane.
Petitioner researched properties and operational businesses.
He developed a business model and consulted with his banker,
construction supervisor, and operations managers. He either
purchased the property individually or purchased the property
indirectly through an entity in which he held an ownership
interest. Petitioner then developed the land, renovated the
existing building, or inventoried the property for future
development. Petitioner leased many of his properties to Shaw’s
Gulf, Inc. (Shaw’s Gulf), or its affiliates, and Shaw’s Gulf
managed the day-to-day business operations.
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Last modified: May 25, 2011