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only a review of the tax opinion letter. He explained that he
relied upon the people at Ingersoll-Rand to make their own
judgments of the value of the machines involved in the Empire
transaction since many of them were engineers and many had their
own resources to ascertain the value of machinery. Gallagher
testified that the taxpayers he advised at Ingersoll-Rand
concerning the Empire transaction "absolutely" understood that
they were not to rely upon him as to the value of the machinery.
While he purportedly read the offering memorandum, Gallagher
could not recall at trial how the Empire transaction was
structured, how Empire was to receive income, or how much its
monthly lease payments were. Gallagher could not even recall the
name of the purported end-user of the recycler in which he
personally had invested.
Gallagher spoke with Taggart and Roberts, but the record
does not indicate what representations they may have made to him
or if he learned anything beyond the representations in the
offering memorandum. Gallagher visited PI at the behest of
Bennett. His observations were those of a layman, and he was
careful to caution that he was not an engineer. As Bennett put
it, Gallagher "could not assess the [Sentinel EPE recycler]
machine in terms of its technical capability," but he could
verify the existence of the machines.
In our view, petitioners' reliance on Gallagher was not
reasonable. It was petitioners' reliance upon the purported
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