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penalties on account of their good faith reliance on their
accountants. See Pierce v. Commissioner, T.C. Memo. 1997-411.
On November 14, 1997, the Court entered its decision, and on
March 23, 1998, respondent assessed the deficiencies pursuant to
this Court’s decision.
On January 24, 1995, after the petition had been filed
regarding the disallowance of the losses that generated the
Pierces’ refunds, Mr. Pierce transferred to petitioner the title
to property located at 9 Deanne Lynn Circle for $1. The property
was encumbered by a mortgage held by Ulster Savings Bank with a
balance of $184,605 as of January 10, 1996. On November 12,
1997, after this Court’s opinion and 2 days before entry of the
decision holding the Pierces liable for large income tax
deficiencies, Mr. Pierce transferred business property located at
2643 Day Hill Road in Windsor, Connecticut, to petitioner for no
consideration. The Day Hill Road property was encumbered by a
mortgage of $197,000, held by the Savings Bank of Manchester.
On October 31, 1991, MCU Financial Corp. (MCU) was
incorporated as a C corporation. Petitioner has been the sole
shareholder and president of MCU from its inception.
On November 27, 1992, DDC Limited Partnership (DDC) was
formed. The general partners were Derek and C. David Weeks, each
of whom held a 1-percent interest in the partnership. Petitioner
was the only limited partner, with a 98-percent interest in the
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