- 58 -
good faith investigate the underlying viability, financial
structure, and economics of the Partnership transactions. We are
unconvinced by the claim of these experienced engineers and
highly sophisticated, able, and successful businessmen that they
reasonably failed to inquire about their investments and simply
relied on the offering circulars and on Green, their tax return
preparers, and ultimately Becker, despite warnings in the
offering circulars and explanations by Becker about the
limitations of his investigation. In each case, these taxpayers
knew or should have known better. We hold, upon consideration of
the entire records, that petitioners are liable for the
negligence additions to tax under the provisions of section
6653(a) for the taxable years at issue. Respondent is sustained
on this issue.
B. Section 6659--Valuation Overstatement
Respondent determined that petitioners are each liable for
the section 6659 addition to tax on the portion of their
respective underpayments attributable to valuation overstatement.
Petitioners have the burden of proving that respondent's
determinations of these section 6659 additions to tax are
erroneous. Rule 142(a); Luman v. Commissioner, 79 T.C. at 860-
861.
A graduated addition to tax is imposed when an individual
has an underpayment of tax that equals or exceeds $1,000 and "is
Page: Previous 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 NextLast modified: May 25, 2011