- 57 -
David v. Commissioner, 43 F.3d at 789-790 (taxpayers' reliance on
expert advice not reasonable where expert lacks knowledge of
business in which taxpayers invested); Goldman v. Commissioner,
39 F.3d at 408 (same). Accordingly, petitioners shall not be
relieved of the negligence additions to tax based upon the
decisions in the Durrett and Chamberlain cases by the Court of
Appeals for the Fifth Circuit.15
5. Conclusion as to Negligence
Under the circumstances of these consolidated cases,
petitioners failed to exercise due care in claiming large
deductions and tax credits with respect to the Partnerships on
their Federal income tax returns. We hold that petitioners did
not reasonably rely upon the offering memoranda and their
colleagues at Shea & Gould. Friedman knew that the tax benefits
were contingent upon the purported value of the Sentinel EPE
recycler, and certainly Alter understood this circumstance or
learned as much from Feinstein. Yet, neither petitioners nor
their purported advisers in good faith investigated the fair
15 Other cases cited by petitioners are inapplicable and
distinguishable for the following general, nonexclusive reasons:
(1) They involve far less sophisticated, if not unsophisticated,
taxpayers; (2) the reasonableness of the respective taxpayers'
reliance on expert advice was established in those cases on
grounds that do not exist here; and (3) the advice given was
within the adviser's area of expertise.
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