either the master’s value or its potential for profit.
Petitioner did not listen to the master or determine its quality
before signing the master recording lease. Petitioner argues
that he sought and relied upon the advice of several people in
the record industry. While petitioner did casually elicit
information from several individuals, petitioner failed to
provide sufficient evidence indicating that he sought the advice
of a professional investment counselor. The record indicates
that petitioner primarily contacted Encore promoters and
individuals at the various distribution companies connected with
Encore. Investors cannot escape the negligence penalty by
relying on the advice of persons who are not professional
investment counselors. Pasternak v. Commissioner, 990 F.2d at
903; Rybak v. Commissioner, 91 T.C. 524, 565 (1988).
We find that a reasonably prudent person would have sought
the advice of an independent tax adviser in a situation such as
this where the return is immediately several times as much as the
initial investment. See Pasternak v. Commissioner, supra at 903;
McCrary v. Commissioner, 92 T.C. 827, 850 (1989); Harris v.
Commissioner, T.C. Memo. 1981-46 (“To anyone * * * not
incorrigibly addicted to the ‘free lunch’ philosophy of life, the
entire scheme had to have been seen as a wholly transparent
sham.”).
Based upon the record in the instant case, we find that
petitioner’s actions do not approach the actions that a
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