Robert R. Gray, Jr. and Vickey L. Gray - Page 9

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          scrutinize a prospectus or other offering materials prior to                
          undertaking an investment, but need only read pertinent portions            
          of such documents and have the remaining portions explained to              
          them by their advisers.  Id.                                                
               As it pertains to the instant issue, we find Heasley v.                
          Commissioner, supra, to be distinguishable on its facts.  We do             
          not believe, as petitioners contend, that the court was declaring           
          that a claim of negligence can be defeated merely by a taxpayer's           
          showing that he or she, being unsophisticated, relied on the                
          advice of a financial adviser, irrespective of whether such                 
          adviser was an insider or whether such advice was reasonable.               
          See Chamberlain v. Commissioner, supra at 732.  Two noteworthy              
          factors distinguish the facts of the instant case from those in             
          Heasley.  First, unlike the taxpayers in Heasley, who not only              
          relied on the advice of their investment adviser, but who also              
          received advice regarding their investment from a certified                 
          public accountant, petitioners relied solely on the advice of               
          Booker, Encore's promoter.                                                  
               Another factor that distinguishes this case from Heasley v.            
          Commissioner, supra, involves petitioners' review of the Encore             
          prospectus.  Although the court in Heasley explained that                   
          unsophisticated taxpayers need read only the pertinent portions             
          of a prospectus or other offering material in order to exercise             
          reasonable care, even the most cursory consideration of the                 
          Encore prospectus and its accompanying tax opinion, in light of             




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