- 27 -
States, supra. Accordingly, petitioners and Sidney’s estate are
sufficiently related to be treated as one taxpayer for purposes
of the duty of consistency.
Respondent has established that all three elements of the
duty of consistency are present in this case. Conrad and Carroll
agreed that the discounted value of the collection was
$14,500,000, and the Commissioner relied upon that value in
assessing the estate tax owed by Sidney’s estate. Once the
period for assessment against Sidney’s estate had closed,
however, petitioners claimed that the collection’s undiscounted
value should be used to calculate the gallery’s COGS. Because
all three elements of the duty of consistency are satisfied, we
hold that petitioners are bound to use the collection’s
discounted value as their basis for purposes of calculating the
gallery’s COGS for 1990 through 1997.
Section 6662 Accuracy-Related Penalties
In petitioners’ statutory notices of deficiency, respondent
asserted accuracy-related penalties under section 6662(a) for
(1) negligence or disregard of rules or regulations,
(2) substantial understatement of income tax, or (3) substantial
valuation overstatement. On brief, however, respondent abandons
the negligence ground and asserts only that petitioners are
liable for the accuracy-related penalties under section 6662(a)
for a substantial understatement of tax under section 6662(b)(2).
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011