Zachary H. Sacks and Salley Sacks v. Commissioner of Internal Revenue
Opinion
Opinion
Goodwin, J.
Zachary and Salley Sacks appeal an order imposing penalties for the negligent underpayment of taxes. 26 U.S.C. §§ 6653 (a) and 6661(a). We affirm the judgment of the Tax Court.
I.
The facts of this case are set out in detail in the Tax Court’s opinion. We summarize the most pertinent ones here.
The Sacks claimed investment losses and deductions for 1981 and 1982 from their participation in Far West Drilling Associates (FWDA). FWDA is a limited partnership formed in Utah on December 4, 1980. According to its May 11, 1981 offering memorandum, FWDA was to engage in (1) a developmental drilling program, (2) an exploratory drilling program, and (3) the acquisition of a license to use, sell, or lease a new drilling product currently being developed-the Terra-Drill. The partnership offered 220 units at $157,500 per unit, with each investor obligated to pay $15,000 upon subscription and the balance evidenced by three eight percent promissory notes payable on March 1, 1982; March 1,1983; and January 15,1994 respectively. The first two payments were to be in the amount of $15,000, and the third in the amount of $112,500.