Gary R. Fears - Page 2

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               FOLEY, Judge:  This matter is before the Court on                      
          respondent’s motion to dismiss for lack of jurisdiction and to              
          strike.  The issue for decision is whether the Court has                    
          jurisdiction to determine whether petitioner is liable for                  
          section 6662(a) and (h)1 penalties relating to 2001.                        
               On October 27, 2000, Gateway Investment Partners (Gateway)             
          was formed.  GF Gateway Investments LLC (GFG) and GF Investors              
          Inc. (GFI), an S corporation, owned 99 percent and 1 percent of             
          Gateway, respectively.  Petitioner was the sole member of GFG and           
          the sole shareholder of GFI.                                                
               On November 21, 2000, GFG sold two foreign currency options            
          (the short options) to Deutsche Bank for $4,950,000 and purchased           
          two foreign currency options (the long options) from Deutsche               
          Bank for $5 million (collectively, the option positions).  On               
          November 22, 2000, GFG contributed the option positions to                  
          Gateway in return for its interest in Gateway.  On December 7,              
          2000, Gateway paid $20,000 for 22,264.28.  On December 13, 2000,            
          the option positions terminated and were not exercised.  On                 
          December 21, 2000, GFG transferred to GFI its 99-percent interest           
          in Gateway.  On that same day, the euro were transferred from               

               1  Unless otherwise indicated, all section references are to           
          the Internal Revenue Code in effect for the year in issue.                  

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