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industry know-how in plastics recycling which would reasonably
lead them to believe that the Partnership transactions would be
economically profitable. The extent of the Bachmann, Schwartz
investigation was a tour of PI's plant in Hyannis and a
discussion with the principals of PI. No independent experts in
the field of plastics or plastics recycling were consulted by
petitioners or Bachmann, Schwartz. The facts of these cases are
distinctly different from those in the Mollen case. We consider
petitioners' arguments with respect to the Mollen case
inapplicable.
Petitioners' arguments are not supported by Anderson v.
Commissioner, 62 F.3d 1266 (10th Cir. 1995), affg. T.C. Memo.
1993-607, where the taxpayers were found liable for negligence
additions to tax. In Anderson, the taxpayers claimed tax
benefits based upon their acquisition of property listed at
$124,500, for which they actually paid $6,225 in a cash
downpayment (5 percent of the purchase price) plus a 5-year
financing arrangement. Had the acquisition been nothing more
than a $6,225 passive investment, noted the Court of Appeals, it
would have been reasonable for the taxpayers to rely on the
advice of a good friend who had thoroughly investigated the
investment.11 However, because the transaction was structured
11 The adviser had his accountant and attorney review and check
out the structure of the investment; he spoke with the investment
principal; he looked into the principal's background and checked
out his references, banks, other business connections, and the
Better Business Bureau; and he spoke with competitors to make
(continued...)
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