Stuart A. and Harriet J. Gollin, et al. - Page 67

                                       - 67 -- 67 -                                        
          of Appeals have affirmed decisions of the Tax Court imposing                
          negligence additions to tax.  See Chakales v. Commissioner, T.C.            
          Memo. 1994-408 (reliance on long-term adviser, who was a tax                
          attorney and accountant, and who in turn relied on a promoter of            
          the venture, held unreasonable), affd. 79 F.3d 726 (8th Cir.                
          1996); Kozlowski v. Commissioner, T.C. Memo. 1993-430 (reliance             
          on adviser held unreasonable absent a showing that the adviser              
          understood the transaction and was qualified to give an opinion             
          whether it was bona fide), affd. without published opinion 70               
          F.3d 1279 (9th Cir. 1995); Freytag v. Commissioner, 89 T.C. 849             
          (1987) (reliance on tax advice given by attorneys and C.P.A.'s              
          held unreasonable absent a showing that the taxpayers consulted             
          any experts regarding the bona fides of the transactions), affd.            
          904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).  Here             
          we have found that none of the advisers consulted by petitioners            
          possessed sufficient knowledge of the plastics recycling business           
          to render a competent opinion.14  This circumstance has been                
          deemed relevant by the Court of Appeals for the Second Circuit,             
          the court to which appeal in these cases lies.  See David v.                
          Commissioner, 43 F.3d at 789-790  (taxpayers' reliance on expert            


          14   Fredericks purports to have spoken to Porter, a licensed               
          engineer and the president of a plastics molding company that at            
          the time was recycling plastic.  However, Porter did not testify            
          at trial, and Fredericks did not establish the extent of Porter's           
          expertise in plastics recycling, if any.  Moreover, when                    
          Fredericks spoke with Porter by telephone they did not discuss              
          the Plastics Recycling transactions or the Sentinel EPE                     
          recyclers.                                                                  



Page:  Previous  57  58  59  60  61  62  63  64  65  66  67  68  69  70  71  72  73  74  75  76  Next

Last modified: May 25, 2011