- 14 -
(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); 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 first learned of the Northeast transaction from
Grant. Grant and petitioner worked in the same accounting firm
for 2 years in the late 1940's, and they were members of the same
tennis and social club during the late 1970's. Petitioner
explained that "The Shelter Rock Tennis Club was a country club
based on tennis. It had a restaurant and a bar, and it was a
social center for its members." Petitioner stated that he and
Grant played tennis together and shared social acquaintances, and
that Grant "lived quite well, somewhat expensively." Petitioner
also noted that he and Grant's brother-in-law had been partners
in the same accounting firm. Petitioner was aware that Grant had
no background knowledge or expertise in the plastics recycling
area.
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