- 11 -
inadequate defense to negligence. 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). We have rejected pleas
of reliance when neither the taxpayer nor advisers purportedly
relied upon knew anything about the nontax business aspects of
the contemplated venture. Beck v. Commissioner, 85 T.C. 557
(1985); Flowers v. Commissioner, 80 T.C. 914 (1983).
Petitioner essentially argues that he reasonably relied on
the purported value of the tapes as set out in the offering
materials and on statements made by Geldbach as to the legitimacy
of the investment. In light of the size of his investment and
the proportionately large tax write-offs, further investigation
by petitioner was mandated. Saviano v. Commissioner, 765 F.2d
643, 654 (7th Cir. 1985), affg. 80 T.C. 955 (1983). While
petitioner consulted with his accountant, he did so after making
his investment, and after considering the information he received
from Andrews and Geldbach. Andrews had no experience in
continuing medical education or the use of tapes for that purpose
and based his opinion that "due diligence" had been done simply
on Geldbach's assurances. Moreover, prior to his investment in
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011