- 31 -
Reliance on representations by insiders, promoters, or
offering materials has been held an inadequate defense to
negligence. Goldman v. Commissioner, supra; Pasternak v.
Commissioner, 990 F.2d 893 (6th Cir. 1993), affg. T.C. Memo.
1991-181; LaVerne v. Commissioner, 94 T.C. 637, 652-653 (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). Pleas of
reliance have been rejected when neither the taxpayer nor the
advisers purportedly relied upon by the taxpayer knew anything
about the nontax business aspects of the contemplated venture.
Goldman v. Commissioner, supra; Freytag v. Commissioner, supra;
Beck v. Commissioner, 85 T.C. 557 (1985); Lax v. Commissioner,
T.C. Memo. 1994-329, affd. without published opinion 72 F.3d 123
(3d Cir. 1995); Sacks v. Commissioner, supra; Steerman v.
Commissioner, T.C. Memo. 1993-447; Rogers v. Commissioner, T.C.
Memo. 1990-619; see also the Plastics Recycling cases cited supra
note 8.
b. Miller
Snyder and Miller are former college classmates and
fraternity brothers who had not spoken to each other for nearly
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011