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published opinion 921 F.2d 280 (9th Cir. 1991); McCrary v.
Commissioner, 92 T.C. 827, 850 (1989); Rybak v. Commissioner, 91
T.C. 524, 565 (1988). We have rejected pleas of reliance when
neither the taxpayer nor the advisers purportedly relied upon by
the taxpayer 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); Steerman v.
Commissioner, T.C. Memo. 1993-447.
Petitioner's investigation of the Hyannis transaction did
not extend beyond discussions with Miller and Roberts and a
review of the offering memorandum. Petitioner had met Miller,
and Miller had urged him to consider Roberts' proposals.
Petitioner had taken no action on several deals proposed by
Roberts, but the plastics recycling idea interested him.
Moreover, petitioner testified that because he knew Miller
personally and had a lot of confidence in him, petitioner decided
to look into the plastics recycling proposal. Petitioner did not
explain exactly why he had any confidence in Miller. The record
is devoid of any history of past dealings between petitioner and
Miller on either a personal or professional basis. Nonetheless,
petitioner's purported confidence in Miller is petitioner's only
explanation of his reason for considering the recycling proposal
and for failing to make any investigation of Roberts.
Petitioner indicated some interest when Roberts called about
the plastics recycling deal, and a copy of the Hyannis offering
memorandum was sent to petitioner. Petitioner testified that he
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