Dawson v. Commissioner

T.C. Memo. 1996-45

UNITED STATES TAX COURT

KENT J. AND RUTH W. DAWSON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 25220-93. Filed February 12, 1996.

Kenneth A. Burns, for petitioners.

David W. Sorensen, for respondent.

MEMORANDUM OPINION

DAWSON, Judge: This case was assigned to Special Trial Judge

Stanley J. Goldberg pursuant to section 7443A(b)(4) and Rules

180, 181, and 183.1 The Court agrees with and adopts the opinion

of the Special Trial Judge which is set forth below.

1
All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
 - 2 -

OPINION OF THE SPECIAL TRIAL JUDGE

GOLDBERG, Special Trial Judge: Respondent determined the

following additions to petitioners' Federal income taxes:

Additions to Tax Additional Interest
Sec. Sec. Sec. Sec. Sec.
Year 6653(a) 6653(a)(1) 6653(a)(2) 6659 6621(c)

1980 $479 --- --- $ 2,877 2
1981 --- $ 833 1 4,996 2
1982 --- 737 1 4,421 2
1983 --- 2,812 1 16,870 2

1
50 percent of the interest payable with respect to the portion of the
underpayment attributable to negligence.
2
120 percent of the interest payable under section 6601 with respect to any
substantial underpayment attributable to tax-motivated transactions.

Following a concession by petitioners,2 the issues for

decision are: (1) Whether petitioners are liable for an addition

to tax under section 6653(a) for 1980; (2) whether petitioners

are liable for additions to tax under section 6653(a)(1) and (2)

for tax years 1981, 1982, and 1983; and (3) whether petitioners

are liable for additions to tax under section 6659.

Petitioners were residents of Henderson, Nevada, when the

petition was filed in this case. Petitioner Kenneth Dawson

(hereinafter referred to as petitioner) is an attorney engaged in

the private practice of law, primarily insurance defense and

2
Although respondent determined increased interest under sec.
6621(c) for all taxable years at issue, petitioners did not raise
this issue in their pleadings or during trial. As such, the
issue is deemed conceded.
 - 3 -

Government consulting, with the law firm of Dawson and Harding in

Las Vegas, Nevada. His wife Ruth Dawson (Mrs. Dawson) is a

teacher and was employed by the Clark County School District

during the taxable years at issue. On their 1983 joint Federal

income tax return, petitioners reported gross income of wages,

interest, dividends, capital gains, and other sources in the

amount of $894,414. Consequently, in the absence of significant

deductions or credits, they would be subject to the payment of a

substantial amount of Federal income taxes for 1983.

During 1983, petitioner's law firm experienced a dramatic

increase in profits resulting from its participation in

litigation involving a fire at the MGM Hotel. Petitioner was

aware of this windfall early in the year, and sought investments

for his income. After reading an advertisement in a local

newspaper that promised tax sheltered investments with a tax

write-off ratio of 4 to 1, petitioner contacted Michael Southard

(Southard) of the Mission Company. At their first meeting,

Southard introduced petitioner to Arthur Geldbach (Geldbach), a

self-described specialist in tax sheltered investments and

financial consulting. Based solely on Southard's recommendation

and Geldbach's promotional material, petitioner hired Geldbach to

provide him and his law partner Samuel Harding with financial

planning services. For his services, petitioner paid Geldbach an

initial fee of $4,000.
 - 4 -

Petitioner informed Geldbach that he was seeking the type of

investments that would provide initial tax benefits and future

income. Geldbach recommended that petitioner invest in a variety

of limited partnerships, including Medical Science Associates

(MSA).3 MSA was engaged in the production, marketing, and

distribution of medical educational video tapes (the tapes) for

continuing medical education of primary care physicians. The

tapes were produced by Hahnemann Medical College and Hospital of

Philadelphia (Hahnemann) in a series of approximately 20 programs

centered around one medical subject area. At issue in this case

is the "Therapeutics through Exercise; Sports Medicine and

Chronic Pain Management in Clinical Practice" series.

Petitioner was familiar with continuing legal education for

attorneys and was aware that similar requirements for physicians

were being proposed. Prior to investing in MSA, petitioner

consulted with Geldbach with respect to its tax benefits and

income potential, and thoroughly reviewed MSA's private placement

memorandum (the offering materials or memorandum). Petitioner

testified that he also consulted with his accountant David

Andrews (Andrews) who informed him that he was not qualified to

3
The remaining partnerships included: (1) Balanced Oil and
Gas Drill/Production Fund; (2) Krypton Associates; (3) Genetic
Bank, Inc.; (4) Seigler Partners Ltd.; and (5) Finalco Equipment
Investors XI. Each reported significant ordinary losses and tax
write-offs.
 - 5 -

give advice on the matter but was impressed by the information in

the offering materials.

The offering materials for MSA consists of 267 pages, a

significant portion of which is dedicated to a discussion of the

tax aspects of the investments. For example, in the initial

pages of the memorandum, the following information is provided:

Estimated Tax Although Medical Science Associates, Limited
Effect Per Partnership * * * may have income from its
$30,600 Unit operations, for illustration purposes, the
figures below do not take into account any
income and assume a 50% tax bracket taxpayer.
The [IRS] may disallow any of the various
elements used in calculating Partnership
expenses and credits thereby reducing federal
income tax benefits of an investment.

1983 1984
Capital Contribution $15,300 $15,300
Deductible Loss Equivalent $44,692 $47,520
Investment Ratio 2.9 to 1 3.1 to 1

The memorandum goes to describe the risks associated with MSA,

including 5 pages dedicated to the tax risks alone. Included as

part of the memorandum is an appraisal by McGraw-Hill Information

Systems Company (McGraw-Hill) which determined the fair market

value of the tapes to be $877,663.

Petitioner invested $61,200 in MSA during 1983 and signed a

promissory note for $61,200 due in 1984. Shortly thereafter, he

began to have misgivings regarding the partnership. In January

1984, when petitioner received a second invoice in the amount of

$5,000 from Geldbach for services to be rendered, he expressed
 - 6 -

concerns about the return of his investment. In a letter dated

May 29, 1984, in response to a conversation held on May 22, the

general partner of MSA Jules Klar (Klar), reassured petitioner

that the Internal Revenue Service had not audited the partnership

returns to date and he had no indication that such a challenge

would be forthcoming.

In July 1984, Andrews wrote a letter to Samuel Harding in

reference to his introduction to Geldbach. Andrews stated:

You asked me how I got acquainted with Arthur Geldbach. My
memory will, perhaps, be faulty with specific details but I
remember the gist of the matter.

In the late spring or early summer of 1984, Art and I met
during a backyard party at the home of a mutual friend.* * *
* * * * *

The next week, we met at the Port Tack Restaurant [to
discuss the investments he had presented to you]. I told
him I was unable to judge the quality of the partnership
investments but that I had serious misgivings about [MSA].
I also told him that you and [petitioner] were less than
happy for me to direct them to staple checks to their 1983
tax return extension requests. He said that [MSA] was an
excellent "tax shelter" and he owned an interest in it also.
I told Art that until the IRS examined, neither of us would
ever know for sure. Art said he was proud of the investments
he had sold you and [petitioner]. He said he was confident
they would perform well both as to investment quality and
tax advantages, and that he had done a good job in selecting
them for you. I interpreted these remarks as meaning he had
performed "due diligence" in reviewing their quality.

As to the fact that you had to pay tax for 1983, he said
your tax was extremely small compared to your income. My
response was that $60,000 was still a huge surprise to you
when you had expected none. Art said you were unrealistic
to interpret Mr. Barney's opinion to mean no tax at all.

Since that lunch, Art and I have had no contact. In fact, we
avoid each other when circumstances put us in the same room.
 - 7 -

I guess it would be awkward for us to talk about anything,
including the weather.

Sam, I hope this limited amount of information has some
usefulness for you and [petitioner]. Frankly, I never
dreamed four years ago that I would need to reconstruct my
slight involvement with a "peripheral" fellow being.
[Emphasis added.]

In August 1984, Gersten, Savage, Kaplowitz & Simensky (Gersten),

the law firm representing the partnership, wrote petitioner and

demanded the second payment of $61,200. Gersten explained that

failure to pay would result in a forfeiture of petitioner's

partnership interest and a loss of all tax advantages stemming

from MSA in 1984. Petitioner assured Gersten that payment was

forthcoming but that it was made with "great reluctance" and that

it should "not be construed as a waiver of any claims" which may

arise from his investment in MSA.4

In October 1984, petitioners filed their 1983 joint Federal

income tax return, wherein they claimed an ordinary loss of

$35,539 and an investment tax credit of $79,441 relating to their

investment in MSA. The tax credit was calculated using the

unadjusted basis ($993,014) of the tapes as reported by MSA on

the Schedule K-1. Petitioner also claimed carryback credits for

4
In 1985, petitioner filed suit against Geldbach and Klar,
and joined in a suit against McGraw-Hill allegedly for
preparation of a fraudulent appraisal.
 - 8 -

the taxable years 1980, 1981, and 1982 in the respective amounts

of $9,589, $16,653, and $14,738.

In Charlton v. Commissioner, T.C. Memo. 1990-402, affd. 990

F.2d 1161 (9th Cir. 1993), a test case involving limited

partnerships engaged in the production, marketing, and

distribution of similar tapes (the CME Partnerships), this Court

found: (1) The transaction was not engaged in for profit; (2)

that the appraisal grossly overstated not only the quality and

value of the tapes but also the sales forecast; and (3) that the

transaction was a sham because it lacked economic substance and a

business purpose. We upheld the section 6661 addition to tax for

substantial understatement of tax, and found that losses and

credits claimed with respect to the CME partnerships were

attributable to tax-motivated transactions within the meaning of

section 6621(c). The underlying transaction in the instant case

is in all material respects identical to the transaction

considered in the Charlton case.

In the notice of deficiency, respondent determined that

petitioners were negligent in claiming their distributive share

of MSA losses and investment tax credits. As such, she

determined that they are liable for additions to tax under

section 6653(a) for 1980, and sections 6653(a)(1) and (2) for

1981 through 1983. Respondent also determined that petitioners

are liable for additions to tax under section 6659 for 1980
 - 9 -

through 1983. Petitioners concede they are liable for the income

tax deficiencies exclusive of additions to tax. However,

petitioner argues that the circumstances of this case differ from

those of the taxpayers in Charlton in that he was not negligent.

Therefore, petitioner contends that he should not be held liable

for additions to tax as determined by respondent.

Section 6653(a) for taxable year 1980 and section 6653(a)(1)

for taxable years 1981, 1982, and 1983, provide that if any

portion of an underpayment of tax is due to negligence or

intentional disregard of rules and regulations, an amount equal

to 5 percent of the underpayment is added to the tax. Section

6653(a)(2) for taxable years 1981 through 1983 provides for an

addition to tax equal to 50 percent of the interest on the

portion of the negligence. Negligence is defined as the failure

to exercise the due care that a reasonable and ordinarily prudent

person would employ under the circumstances. Zmuda v.

Commissioner, 731 F.2d 1417, 1422 (9th Cir. 1984), affg. 79 T.C.

714 (1982); Neely v. Commissioner, 85 T.C. 934, 947 (1985). The

question is whether a particular taxpayer's actions in connection

with the transactions were reasonable in light of his experience

and the nature of the investment or business. See Henry Schwartz

Corp. v. Commissioner, 60 T.C. 728, 740 (1973). Respondent's

determinations are presumed correct and petitioners bear the

burden of establishing otherwise. Hall v. Commissioner, 729 F.2d
 - 10 -

632, 635 (9th Cir. 1984), affg. T.C. Memo. 1982-337; Bixby v.

Commissioner, 58 T.C. 757, 791-792 (1972).

Petitioner maintains that he acted reasonably and with all

due care in claiming deductions and credits with respect to his

investment in MSA. In support thereof, petitioner argues: (1)

He relied on advice from an independent financial planner; (2) he

relied on an appraisal of the tapes prepared by a well known and

respected company; (3) he was familiar with the use of videos for

continuing professional education; (4) he did not have time

during 1983 to independently investigate each partnership he

invested in; and (5) he monitored his investment and filed suit

against those involved when MSA did not perform as expected.

Under certain circumstances, a taxpayer may avoid liability

for the additions to tax under section 6653(a) if reasonable

reliance on a competent professional advisor is shown. Freytag

v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011

(5th Cir. 1990), affd. 501 U.S. 868 (1991). Reliance on advice

of a professional is not, standing alone, an absolute defense to

negligence, but rather a factor to be considered. Id. In order

for reliance on professional advice to excuse a taxpayer from the

negligence additions to tax, the reliance must be reasonable, in

good faith, and based upon full disclosure. Id.

A taxpayer's reliance on representations by insiders,

promoters, or offering materials has been found to be an
 - 11 -

inadequate defense to negligence. LaVerne v. Commissioner, 94

T.C. 637, 652-653 (1990), affd. without published opinion 956

F.2d 274 (9th Cir. 1992), affd. without published opinion sub

nom. Cowles v. Commissioner, 949 F.2d 401 (10th Cir. 1991);

Marine v. Commissioner, 92 T.C. 958, 992-993 (1989), affd.

without published opinion 921 F.2d 280 (9th Cir. 1991); McCrary

v. Commissioner, 92 T.C. 827, 850 (1989). We have rejected pleas

of reliance when neither the taxpayer nor advisers purportedly

relied upon knew anything about the nontax business aspects of

the contemplated venture. Beck v. Commissioner, 85 T.C. 557

(1985); Flowers v. Commissioner, 80 T.C. 914 (1983).

Petitioner essentially argues that he reasonably relied on

the purported value of the tapes as set out in the offering

materials and on statements made by Geldbach as to the legitimacy

of the investment. In light of the size of his investment and

the proportionately large tax write-offs, further investigation

by petitioner was mandated. Saviano v. Commissioner, 765 F.2d

643, 654 (7th Cir. 1985), affg. 80 T.C. 955 (1983). While

petitioner consulted with his accountant, he did so after making

his investment, and after considering the information he received

from Andrews and Geldbach. Andrews had no experience in

continuing medical education or the use of tapes for that purpose

and based his opinion that "due diligence" had been done simply

on Geldbach's assurances. Moreover, prior to his investment in
 - 12 -

MSA, both Geldbach and Southard were unknown to petitioner. We

cannot say that reliance on the advice of virtual strangers who

promoted MSA amounts to reasonable conduct. Such reliance is not

the type of activity that overcomes the additions to tax for

negligence or intentional disregard of the rules or regulations.

Patin v. Commissioner, 88 T.C. 1086, 1130 (1987), affd. without

published opinion 865 F.2d 1264 (5th Cir. 1989), affd. sub nom.

Gomberg v. Commissioner, 868 F.2d 865 (6th Cir. 1989), affd. sub

nom. Skeen v. Commissioner, 864 F.2d 93 (9th Cir. 1989), affd.

without published opinion sub nom. Hatheway v. Commissioner, 856

F.2d 186 (4th Cir. 1988).

Petitioner points to his reliance on the appraisal prepared

by McGraw-Hill as evidence of his reasonable and prudent conduct.

However, the appraisal was part and parcel of the memorandum and

may not be considered unbiased and independent information. In

addition, a thorough reading of the appraisal indicates that the

calculation of the fair market value of the tapes was based on

many assumptions, several of which are in direct conflict with

information provided elsewhere in the memorandum. Petitioner's

argument that the cost of an independent appraisal would have

been prohibitive is unconvincing. See Kirwan v. Commissioner,

T.C. Memo. 1994-520.

Petitioner cites Mollen v. United States, 72 AFTR2d 93-

6443), 93-2 USTC par. 50,585 (D. Ariz. 1993), in support of his
 - 13 -

position that he reasonably relied on the advice of independent

parties. Petitioner contends that the factors considered by the

Court in Mollen are generally applicable to the instant case.

The underlying transaction in Mollen is in all material respects

identical to the transactions at issue in this case and that of

Charlton v. Commissioner, T.C. Memo. 1990-402. However, the

facts and circumstances surrounding the taxpayer in Mollen and

his investment in the limited partnership Diabetics CME Group,

Ltd. (Diabetics) are distinguishable from the instant case.

The taxpayer in Mollen was a physician specializing in the

study of diabetes and a leader of a continuing medical education

(CME) accreditation program for a local hospital. He served on a

committee in charge of evaluating CME programs and had a prior

association with Hahnemann. Prior to investing in Diabetics, he

consulted with his personal accountant and a tax attorney. The

taxpayer had no prior business experience. Petitioner, on the

other hand, is a sophisticated attorney with business experience

and knowledge of investments, as evidenced by his interest in a

real estate partnership and rental properties. Petitioner had no

expertise in medicine or therapeutic exercise. His experience

with continuing legal education does not equate to a knowledge of

the nontax business activities of MSA. Petitioner also relied on

the advice of an adviser to whom he had just been introduced by

an unknown promoter of tax shelters. We find Mollen v. United
 - 14 -

States, supra, to be distinguishable and not binding on this

Court.

Petitioner also cites Pelham v. Commissioner, T.C. Memo.

1993-441 in support of his case. The taxpayers in Pelham were

uneducated and unsophisticated investors who were introduced to

their financial planner by their personal accountant, with whom

they had a prior relationship of trust. They invested in a tax

shelter based on the assurances of their accountant and the

financial planner, who was later indicted for fraud and filing

fraudulent tax returns. Clearly, petitioner is distinguishable

from the taxpayers in Pelham.

Petitioner attempts to distinguish himself from the

taxpayers in Charlton v. Commissioner, supra, by arguing that he

relied on independent counsel and specifically on the appraisal

by McGraw-Hill. We find petitioner's reliance to be inadequate;

as an attorney he should have exercised more care. While he did

not have considerable experience with tax shelters, petitioner is

well educated and was sophisticated in business. By his own

testimony, petitioner owned and managed a law firm that at one

time employed 18 or 19 attorneys, and he earned close to $900,000

in fees during 1983. We conclude that a reasonable person with

his background would have been on notice that further

investigation of the investment in MSA was warranted.
 - 15 -

Petitioner contends that his continued monitoring of his

investment and the subsequent litigation against Geldbach and

McGraw-Hill demonstrate that he had a bona fide profit motive in

investing in MSA. However, much of the correspondence received

by petitioner in response to his concerns primarily addressed the

validity of the tax benefits of the partnership, not the income

potential. In addition, petitioner made a second investment in

MSA during 1984, well after he began to have serious doubts about

MSA and its ability to withstand an audit by the Internal Revenue

Service. Petitioners filed their 1983 Federal income tax return

in October 1984, wherein they claimed their distributive share of

partnership losses and credits, well after both they and Andrews

voiced concerns about the credibility of the investment.

We are not persuaded that petitioner lacked interest in the

tax benefits generated by MSA. He testified that he was seeking

an investment that provided initial tax benefits. According to

the memorandum, the projected benefits for investors of $30,600

were investment tax credits and losses exceeding the investment

by a ratio of 2.9 to 1 in 1983, and 3.1 to 1 in 1984. In the

first year, petitioners claimed an operating loss in the amount

of $35,539 and credits totaling $79,441, while petitioners'

investment was only $61,200. The direct reductions in

petitioners' Federal income tax equaled 188 percent of their cash

investment. Given that petitioners' gross income for 1983
 - 16 -

approximated $900,000, their alleged lack of interest in the tax

benefits generated by MSA is unconvincing.

We are also unpersuaded by petitioners' argument that

because of his busy law practice and heavy responsibilities with

the MGM disaster litigation, he could not be expected to spend

time investigating the MSA partnership. Petitioner claims that

he hired a financial planner so that he would not have to spend

his time or resources investigating potential investments. In

our view, despite his numerous responsibilities, petitioner is

required to exercise due care with respect to his Federal income

taxes. Wilson v. Commissioner, T.C. Memo. 1995-525.

Based on the foregoing we find that petitioner failed to

establish that he acted in a reasonable and prudent manner when

he invested in MSA. Accordingly, we find petitioners were

negligent in claiming the loss and credits on their returns for

the taxable years at issue. Respondent's determination of the

additions to tax under section 6653(a) for 1980 and 6653(a)(1)

and (a)(2) for 1981, 1982, and 1983 is sustained.

We next consider whether petitioners are liable for

additions to tax under section 6659. Under this section, a

graduated addition to tax is imposed when an individual has an

underpayment of tax that equals or exceeds $1,000 and "is

attributable to" a valuation overstatement. Sec. 6659(a), (d).

A valuation overstatement exists if the fair market value (or
 - 17 -

adjusted basis) of property claimed on a return equals or exceeds

150 percent of the amount determined to be the correct amount.

Sec. 6659(c). If the claimed valuation exceeds 250 percent of

the correct value, the addition is equal to 30 percent of the

underpayment. Sec. 6659(b).

Petitioners claimed an operating loss and investment tax

credits based on purported values of $993,014 for the tapes. This

Court found in Charlton v. Commissioner, T.C. Memo. 1990-402,

that the tapes were grossly overvalued. We find that if

disallowance of petitioners' claimed tax benefits is attributable

to valuation overstatement, petitioners are liable for the

section 6659 additions to tax at the rate of 30 percent of the

underpayments of tax attributable to the tax benefits claimed

with respect to MSA.

Section 6659 does not apply to underpayments of tax that are

not "attributable to" valuation overstatements. See McCrary v.

Commissioner, 92 T.C. 827 (1989); Todd v. Commissioner, 89 T.C.

912 (1987), affd. 862 F.2d 540 (5th Cir. 1988). To the extent

taxpayers claim tax benefits that are disallowed on grounds

separate and independent from alleged valuation overstatements,

the resulting underpayments of tax are not attributable to

valuation overstatements. Krause v. Commissioner, 99 T.C. 132,

178 (1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d

1024 (10th Cir. 1994). However, when valuation is an integral
 - 18 -

factor in disallowing deductions and credits, section 6659 is

applicable. See Illes v. Commissioner, 982 F.2d 163, 167 (6th

Cir. 1992) (section 6659 addition to tax applies if a finding of

lack of economic substance is "due in part" to a valuation

overstatement), affg. T.C. Memo. 1991-449.

Petitioners concede they are not entitled to any losses or

credits arising from their investment in MSA. The record in this

case and the test case of Charlton v. Commissioner, supra,

clearly shows that the overvaluation of the tapes was integral to

and was the core of our holding that the underlying transaction

herein was a sham and lacked economic substance. When a

transaction lacks economic substance, section 6659 will apply

because the correct basis is zero and any basis claimed in excess

of that is a valuation overstatement. Gilman v. Commissioner,

933 F.2d 143, 151 (2d Cir. 1991), affg. T.C. Memo. 1989-684;

Rybak v. Commissioner, 91 T.C. 524, 566-567 (1988). Accordingly,

we conclude that the deficiency caused by the disallowance of the

claimed loss and credits was attributable to the overvaluation of

the tapes.

Petitioners contend that respondent abused her discretion in

failing to waive the section 6659 additions to tax pursuant to

section 6659(e). Section 6659(e) authorizes respondent to waive

all or part of the addition to tax for valuation overstatements

if taxpayers establish that there was a reasonable basis for the
 - 19 -

adjusted basis or valuations claimed on the returns and that such

claims were made in good faith. Respondent's refusal to waive a

section 6659 addition to tax is reviewable by this Court for

abuse of discretion. Krause v. Commissioner, 99 T.C. at 179.

Petitioner argues that he arrived at his valuation of the

tapes by virtue of his relying on Geldbach and Andrews, and on an

appraisal prepared by McGraw-Hill, in addition to representations

made in the offering materials. He contends that such reliance

was reasonable, and, therefore, respondent should have waived the

section 6659 addition to tax. We have found that petitioner's

reliance on the above was not reasonable because neither Geldbach

nor Andrews had expertise in continuing medical education, the

offering materials contained numerous disclaimers and stated that

prior similar ventures had not been as successful as predicted,

and petitioner did not perform any independent investigation into

the history, experience, credibility, reputation, or finances of

MSA or its promoters.

Petitioners did not have a reasonable basis for the adjusted

base or valuation claimed on their 1983 return with respect to

their investment in MSA. The record does not establish an abuse

of discretion on the part of respondent with respect to the

addition to tax under section 6659. In addition, the record

fails to indicate that petitioners ever requested a waiver from

respondent pursuant to section 6659(e) until briefing after
 - 20 -

trial. We are reluctant to find that respondent abused her

discretion here when, for all the record shows, she was not even

timely requested to exercise it. See Wilson v. Commissioner,

T.C. Memo. 1995-525 (citing Haught v. Commissioner, T.C. Memo.

1993-58; Lapin v. Commissioner, T.C. Memo. 1990-343, affd.

without published opinion 956 F.2d 1167 (9th Cir. 1992).

Accordingly, respondent is sustained on this issue.

Decision will be entered

for respondent.