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when the Fitch Property was conveyed, and therefore the gain
realized was not taxable. Nothing in the record supports this
fabrication.
The facts in this case show that the Fitch Property was
conveyed to AAL by the Partnership, not the LLC, and as noted
previously, the Certificate of Limited Liability Company of the
LLC was not even filed in the Office of the Secretary of State
(Delaware) until September 19, 1994, at least 4 months after the
Fitch Property had been conveyed by the Partnership to AAL.
We conclude that petitioners have failed to meet their
burden of proving that they acted with reasonable cause and in
good faith. Furthermore, based upon our holding on the first
issue in this case and concessions by petitioners, petitioners
owe taxes for 1994 and 1995 well in excess of the level
constituting a substantial understatement. We therefore sustain
respondent’s determination that petitioners are liable for the
accuracy-related penalty.
In reaching our holdings herein, we have considered all
arguments made, and to the extent not mentioned above we find
them to be irrelevant, moot, or without merit. All of
petitioners’ objections on the ground of relevancy contained in
the Stipulation of Facts have been considered and are denied.
Decision will be entered
for respondent.
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