Marvin W. and Kathryn A. McPike - Page 11

                                       - 11 -                                         
          on the alleged expertise of Lukensow and the promotional                    
          materials was not reasonable or prudent.  Pasternak v.                      
          Commissioner, 990 F.2d 893, 902-903 (6th Cir. 1993), affg.                  
          Donahue v. Commissioner, T.C. Memo. 1991-181; Klieger v.                    
          Commissioner, T.C. Memo. 1992-734.  Without any previous                    
          investment experience, petitioners agreed to purchase $200,000              
          worth of assets and incur debt of $190,100 solely upon the                  
          representations and promotional materials presented by Lukensow,            
          an individual they discovered in a newspaper advertisement.                 
          Petitioners relied solely on Lukensow's representations as to his           
          expertise without any further research.  They also relied on his            
          representations and the promotional material as to the legitimacy           
          of the container investment, without any further investigation,             
          although Lukensow, as a promoter, earned fees from the sale of              
          the container leasing program.  Petitioners proceeded to invest             
          cash of nearly $10,000 and purported to incur liability for                 
          approximately $190,100, hoping to save taxes at virtually no                
          cost to themselves, due to the refunds from the ITC carryback               
          claims.5                                                                    
               It is clear that petitioners were sheltering income                    
          improperly with large deductions and small cash investments.  For           


          5         Prior to the filing of their 1983 return, petitioners             
          had undergone an audit of their 1980 and 1981 income tax returns            
          in connection with an investment in the Universal Life Church and           
          had been assessed substantial deficiencies, interest, and                   
          additions to tax in connection therewith.                                   




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011