- 37 -
were made in good faith. Respondent's refusal to waive a section
6659 addition to tax is reviewable by this Court for abuse of
discretion. Krause v. Commissioner, 99 T.C. at 179.
Petitioners urge that they relied on Gallagher and the
offering materials in deciding on the valuation claimed on their
tax return. Petitioners each contend that such reliance was
reasonable, and, therefore, respondent should have waived the
section 6659 addition to tax. Petitioners rely upon Krause v.
Commissioner, supra; Rousseau v. United States, 91-1 USTC par.
50252 (E.D. La. 1991); and Mauerman v. Commissioner, 22 F.3d 1001
(10th Cir. 1994), revg. T.C. Memo. 1993-23, in support of their
argument.
We have found that petitioners' purported reliance on
Gallagher, and the offering materials was not reasonable.
Gallagher was a representative of Bankers Trust. He was not an
engineer and he never represented himself as being an expert in
plastics or plastics recycling. In Gallagher's view, Bankers
Trust's due diligence responsibility, and therefore Gallagher's
own responsibility, was limited to reviewing the tax opinion
letter included in the offering memorandum. The evaluators whose
reports were attached to the offering memorandum each owned
interests in partnerships that leased Sentinel EPE recyclers.
The offering memorandum contained numerous caveats, including the
following: NO OFFEREE SHOULD CONSIDER THE CONTENTS OF THIS
MEMORANDUM *** AS *** EXPERT ADVICE. *** EACH OFFEREE SHOULD
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