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To the best of my recollection, this was presented
as a distressed property with the possibility of profit
and each distressed property acquired is usually
employed for whatever was built.
We had apartment houses. We had hotels. This was
the first one that was a health facility.
I addressed myself to the value of the property,
to the placement of the property and so explained it to
the investors. The actual narrative of it, I do not
remember.
It is true that reliance on the advice of an expert can, in
some circumstances, defeat a claim of negligence. E.g.,
Industrial Valley Bank & Trust Co. v. Commissioner, 66 T.C. 272,
283 (1976). The long and the short of it, however, is that this
is not one of those cases. Not only could Vebeliunas not
remember well what he advised petitioners, petitioners have not
pointed out to us any testimony by Vebeliunas that relates at all
to the tax consequences of their investments. Petitioners have
failed to carry their burden of proving that they were not
negligent, and we so find. We uphold respondent's determinations
of negligence in all respects.
B. Substantial Understatement
Respondent has determined additions to tax under section
6661 for all years in issue and for all petitioners except for
petitioners Zards. For returns due before January 1, 1990,
section 6661 provides for an addition to tax equal to 25 percent
of the amount of any underpayment attributable to a substantial
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