- 9 -
discussed them all with her".7 There is no evidence in the
record that either return preparer relied on anything other than
the materials provided to petitioner by Southampton or that they
investigated the bona fides of the master recording investment
at the time they completed petitioner's 1982 and 1983 tax
returns.
Subsequent to investing in Southampton, and after his 1982
tax return was filed, petitioner wrote to Indigo requesting a
sample copy of the Ray Pillow album and information about when
he could expect to receive royalty payments from album sales.
Petitioner also wrote to Southampton seeking clarification of
the percentage of profits to be paid to Southampton as
additional rent pursuant to the master recording lease. The
letters from petitioner to Indigo and Southampton do not request
information about the sales potential of the Ray Pillow master
recording. In addition to a copy of the album, petitioner
received correspondence from Southampton explaining the revenue
distribution clause of the lease agreement and two letters sent
by Indigo to all Southampton investors regarding proposed
distribution outlets and marketing techniques. Additionally, in
early 1985, petitioner claims to have learned from Southampton
that other investors had been successfully represented before
7 We note, however, that petitioner's 1983 tax return does not
bear a preparer's signature.
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