- 66 -- 66 -
of petitioners saw a Sentinel EPE recycler prior to investing in
the Partnerships. Not only were petitioners not under the
impression that the IRS had informally approved of the Plastics
Recycling transactions, but the offering memoranda expressly
warned of a substantial likelihood of audit and that the purchase
price of the recyclers would probably be challenged by the IRS as
being in excess of fair market value. In addition, even though
PI had obtained patents prior to the Plastics Recycling
transactions, PI actually claimed that it had never obtained
patents on any of its machines. The facts of petitioners' cases
are distinctly different from those in Chellappan v.
Commissioner, T.C. Memo. 1988-208, and we consider it
inapplicable under the circumstances of petitioners' cases.
Petitioners also rely on two recent decisions by the Court
of Appeals for the Fifth Circuit that reversed this Court's
imposition of the negligence additions to tax in a pair of non-
plastics recycling cases: Durrett v. Commissioner, 71 F.3d 515
(5th Cir. 1996); and Chamberlain v. Commissioner, 66 F.3d 729
(5th Cir. 1995). The taxpayers in the Durrett and Chamberlain
cases were among thousands who invested in the First Western tax
shelter program involving alleged straddle transactions of
forward contracts. In the Durrett and Chamberlain cases, the
Court of Appeals for the Fifth Circuit concluded that the
taxpayers reasonably relied upon professional advice concerning
tax matters. In other First Western cases, however, the Courts
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