- 33 -- 33 -
Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973).
When considering the negligence addition to tax, we evaluate the
particular facts of each case, judging the relative
sophistication of the taxpayers, as well as the manner in which
they approached their investment. McPike v. Commissioner, T.C.
Memo. 1996-46. Compare Spears v. Commissioner, T.C. Memo. 1996-
341, with Zidanich v. Commissioner, T.C. Memo. 1995-382.
Petitioners argue that they were reasonable in claiming
deductions and credits with respect to the Partnerships. They
maintain that they reasonably expected an economic profit in
light of the so-called oil crisis in the United States in 1981
and 1982, and that they reasonably relied upon the offering
materials and one or more qualified advisers. Petitioners each
claim to have relied on Becker. In addition, Fishbach maintains
that he also relied on Hertan, and Fredericks contends that he
also relied on Steele, Cohen, and Porter.
1. The So-Called Oil Crisis
Petitioners contend that they reasonably expected to make an
economic profit from the Partnership transactions because plastic
is an oil derivative and the United States was experiencing a so-
called oil crisis during the years 1981 and 1982. In support of
this argument, petitioners cite Krause v. Commissioner, 99 T.C.
132 (1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d
1024 (10th Cir. 1994) and Von Scoyoc v. Commissioner, T.C. Memo.
1988-520, affd. without published opinion 898 F.2d 149 (4th Cir.
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011