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sustained respondent's imposition of the negligence additions to
tax with respect to one of the partners therein.13 The taxpayer
had relied in part upon a tax opinion contained in the offering
materials. The Court of Appeals for the Ninth Circuit reversed
our imposition of the negligence additions to tax. However, the
prefaces to the offering memoranda14 for the Partnerships herein
warned prospective investors that the tax opinion letter was not
in final form, and was prepared for the general partner, and that
prospective investors should consult their own professional
advisers with respect to the tax benefits and tax risks
associated with the respective Partnerships. The tax opinion
letter was addressed solely to the general partner and contained
the following opening disclaimer:
This opinion is provided to you for your individual
guidance. We expect that prospective investors will
rely upon their own professional advisors with respect
to all tax issues arising in connection with an
investment in the Partnership and the operations
thereof. We recognize that you intend to include this
letter with your offering materials and we have
consented to that with the understanding that the
13 Osterhout v. Commissioner, T.C. Memo. 1993-251, involved a
group of consolidated cases. The parties therein agreed to be
bound by the Court's opinion regarding the application of the
additions to tax provided for under sec. 6653(a), inter alia.
Accordingly, although the Court's analysis focused on one
taxpayer, the additions to tax were sustained with respect to all
of the parties.
14 As noted, the offering memoranda for SAB Reclamation and SAB
Recovery were submitted into the records in docket Nos. 1643-89
and 618-90, the Snyder cases, but not in docket No. 599-89, the
Busch case.
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