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analyze the technical aspects of the Plastics Recycling
transactions. Nor do the records show that petitioners or their
colleagues ever hired any plastics engineering or technical
experts with respect to the Plastics Recycling transactions.
Feinstein spoke with Lauren, who may have had some knowledge of
the plastics industry, but their discussion was limited to PI's
reputation; Feinstein refrained from asking Lauren anything about
plastics recycling, competitive machines, or these particular
Plastics Recycling transactions. In the end, petitioners and
their colleagues relied exclusively on PI, its personnel, and the
offering materials as to the value and purported uniqueness of
the machines.
In support of their contention that they acted reasonably,
petitioners cite Mauerman v. Commissioner, 22 F.3d 1001 (10th
Cir. 1994), revg. T.C. Memo. 1993-23. However, the facts in the
Mauerman case are distinctly different from the facts of these
cases. In Mauerman, the Court of Appeals for the Tenth Circuit
held that the Commissioner had abused her discretion for not
waiving a section 6661 addition to tax. Like the section 6659
addition to tax, a section 6661 addition to tax may be waived by
the Commissioner if the taxpayer demonstrates that there was
reasonable cause for his underpayment and that he acted in good
faith. Sec. 6661(c). The taxpayer in Mauerman relied upon
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