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misstatements applies to all of SMP’s partnership adjustments for
1997. Alternatively, respondent determined that, pursuant to
section 6662(a), the 20-percent accuracy-related penalty applies
on the grounds of negligence or disregard of rules and
regulations, a substantial understatement of income tax, or a
substantial valuation misstatement.
For 1998, respondent disallowed SMP’s claimed long-term
capital loss of $80,190,418 on the 1998 sale of the $81 million
receivable. Respondent determined instead that SMP recognized
long-term capital gain of $1.4 million on this sale.75
Respondent determined that, pursuant to section 6662(h), the 40-
percent accuracy-related penalty for gross valuation
misstatements applies to all of SMP’s partnership adjustments for
1998 (except for the aforementioned long-term capital gain
adjustment of $211,407). Alternatively, respondent determined
that, pursuant to section 6662(a), the 20-percent accuracy-
related penalty applies on the grounds of negligence or disregard
of rules and regulations, a substantial understatement of income
tax, or a substantial valuation misstatement.
B. Corona
On January 24, 2003, respondent issued an FPAA to Corona for
its taxable year ended December 31, 1997. Respondent disallowed
75 Respondent also determined that $211,407 of pass-through
gain that SMP reported on Sch. D of its partnership tax return
for 1998 should have been passed through to its members.
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