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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 non-plastics
cases: Durrett v. Commissioner, 71 F.3d 515 (5th Cir. 1996),
affg. in part and revg. in part T.C. Memo. 1994-179; Chamberlain
v. Commissioner, 66 F.3d 729 (5th Cir. 1995), affg. in part and
revg. in part T.C. Memo. 1994-228. 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 of Appeals
have affirmed decisions of the Tax Court imposing the 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
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