- 47 -
Petitioners urge that they relied on Bachmann and Greene,
respectively, and in varying degrees the offering memoranda, in
deciding on the valuation claimed on their tax returns.
Petitioners each contend that such reliance was reasonable, and,
therefore, respondent should have waived the section 6659
addition to tax. Petitioners cite Krause v. Commissioner, supra;
Mauerman v. Commissioner, 22 F.3d 1001 (10th Cir. 1994), revg.
T.C. Memo. 1993-23; Rousseau v. United States, 91-1 USTC par.
50,252 (E.D. La. 1991); in support of their argument.
We have found that petitioners' purported reliance on
Bachmann and Greene, and the offering memoranda, was not
reasonable. Neither Bachmann nor Greene, nor petitioners nor
anyone affiliated with Bachmann, Schwartz, was educated or
experienced in plastics or plastics recycling. The evaluators
whose reports were appended to each of the offering memoranda
each owned interests in partnerships which leased Sentinel EPE
recyclers. The offering memoranda contained numerous caveats,
including the following: NO OFFEREE SHOULD CONSIDER THE CONTENTS
OF THIS MEMORANDUM *** AS *** EXPERT ADVICE. EACH OFFEREE SHOULD
CONSULT HIS OWN PROFESSIONAL ADVISERS. Petitioners did not see a
Sentinel EPE recycler prior to investing in Scarborough or
Plymouth, nor did they independently investigate the recyclers.
Petitioners' reliance on Krause v. Commissioner, supra,
Mauerman v. Commissioner, supra, and Rousseau v. United States,
supra, in support of their contentions that they acted
reasonably, is misplaced. In the Krause and Rousseau cases, the
Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: May 25, 2011