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Association, led a continuing medical education (CME)
accreditation program for local hospitals. The underlying tax
matter involved the taxpayer's investment in Diabetics CME Group,
Ltd., a limited partnership that invested in the production,
marketing, and distribution of medical educational video tapes.
The District Court found that the taxpayer's personal expertise
and insight in the underlying investment gave him reason to
believe it would be economically profitable. Although the
taxpayer was not experienced in business or tax matters, he did
consult with an accountant and a tax lawyer regarding those
matters. Moreover, the District Court noted that the propriety
of the taxpayer's disallowed deduction therein was "reasonably
debatable." Id.; see Zfass v. Commissioner, T.C. Memo. 1996-167.
The records in these cases show that neither petitioners nor
Becker had any formal education, expertise, or experience in
plastics materials or plastics recycling. None of them had any
personal insight or industry know-how in plastics recycling that
would reasonably lead them to believe that the Plastics Recycling
transactions would be economically profitable. Petitioners and
Becker relied upon representations by insiders of the ventures;
neither hired any independent experts in the field of plastic
materials or plastics recycling. Becker discussed the
transactions with Canno, who apparently was familiar with the
plastics industry, but did not hire Canno to investigate PI and
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