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States, supra, to be distinguishable and not binding on this
Court.
Petitioner also cites Pelham v. Commissioner, T.C. Memo.
1993-441 in support of his case. The taxpayers in Pelham were
uneducated and unsophisticated investors who were introduced to
their financial planner by their personal accountant, with whom
they had a prior relationship of trust. They invested in a tax
shelter based on the assurances of their accountant and the
financial planner, who was later indicted for fraud and filing
fraudulent tax returns. Clearly, petitioner is distinguishable
from the taxpayers in Pelham.
Petitioner attempts to distinguish himself from the
taxpayers in Charlton v. Commissioner, supra, by arguing that he
relied on independent counsel and specifically on the appraisal
by McGraw-Hill. We find petitioner's reliance to be inadequate;
as an attorney he should have exercised more care. While he did
not have considerable experience with tax shelters, petitioner is
well educated and was sophisticated in business. By his own
testimony, petitioner owned and managed a law firm that at one
time employed 18 or 19 attorneys, and he earned close to $900,000
in fees during 1983. We conclude that a reasonable person with
his background would have been on notice that further
investigation of the investment in MSA was warranted.
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