Ronald L. DeVault - Page 13

                                       - 12 -                                         
               Although petitioner alleges that he abandoned or forfeited             
          his interest in Union Machine before the year in issue, he did              
          not affirmatively transfer his shares to another person in                  
          accordance with the Washington Business Corporation Act.  In                
          particular, petitioner had opportunities in both 1998 and 1999 to           
          transfer his shares to Mr. Turner for valuable consideration, but           
          petitioner rejected those offers.  Moreover, petitioner does not            
          claim that he was a dissenting shareholder who demanded a fair              
          value payment for his shares.  Likewise, Mr. Turner has not                 
          sought a declaratory judgment that he is the sole shareholder,              
          nor has he sought judicial dissolution of the corporation, and              
          Union Machine has not redeemed petitioner’s shares.                         
               Based on the entirety of the record, petitioner failed to              
          satisfy his burden to prove that he was not a shareholder of                
          Union Machine for the taxable year 2000.  Accordingly, we sustain           
          respondent’s determination on this issue.                                   
               B.  Section 6662(a) Substantial Understatement of Tax                  
               Respondent determined in the notice of deficiency that                 
          petitioner is liable for the accuracy-related penalty under                 
          section 6662(a) for a substantial understatement of income tax              
          for the taxable year 2000.                                                  

               13  The record does not indicate whether petitioner received           
          these Schedules K-1.                                                        

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011