-105-
Corona’s claimed long-term capital loss of $78,768,955 on the
sale of the $79 million receivable. Respondent determined
instead that Corona recognized a long-term capital gain of
$1,144,000 on this sale. Respondent determined that, pursuant to
section 6662(h), the 40-percent accuracy-related penalty for
gross valuation misstatements applies to all of Corona’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.
OPINION
As becomes apparent from the foregoing findings, the facts
in these cases are a virtual labyrinth. At the heart of the
labyrinth, where one might expect to find, if not a Minotaur,
then at least an old movie lion, we find high-basis, low-value
assets (said to have spawned startling losses) and some B-grade
films. To help thread the labyrinth, we briefly recap some
salient facts.
In 1996, Mr. Lerner was involved with the Safari
consortium’s failed bid to acquire MGM. Subsequently, Mr. Lerner
was contacted by CDR’s representative, Rene Claude Jouannet, who
had been assigned the task of selling the assets in MGM’s parent
company, MGM Group Holdings (later renamed SMHC). Messrs. Lerner
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