Graffia v. Commissioner

*475ORDER

In these consolidated appeals, the Graf-fia family — Paul and Marilynne, along with their adult son David and his wife Amy— challenge the Tax Court’s ruling that collectively they have a tax deficiency of $228,469 for tax years 2005 through 2007 and owe a $44,693 penalty. The deficiency principally results from flow-through losses that Marilynne, David, and Amy attributed to Preferred Capital Services Corporation, an S corporation operated by Paul and owned by Marilynne and David. After a trial, the Tax Court found that these losses are based on sham transactions. The court also…