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Petitioner also argues that his own investigation of the
music industry constituted sufficient inquiry into the
Southampton investment to preclude imposition of section 6653(a)
negligence additions. Negligence additions may be imposed if a
taxpayer fails to exercise due diligence in an investigation
into the bona fides of an obviously suspect transaction.
Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992),
affg. T.C. Memo. 1991-179; LaVerne v. Commissioner, supra at
652-653. Petitioner's education and experience as a financial
analyst should be considered in determining whether he was
negligent in failing to conduct a good faith investigation of
the Southampton master recording program. Leuhsler v.
Commissioner, supra; Freytag v. Commissioner, 89 T.C. at 887-
889.
On its face, the Southampton investment should have raised
serious questions in the minds of ordinarily prudent investors.
The fact that Southampton leased petitioner a one-fourth
interest in a master recording purportedly worth $850,000 for a
total of $10,500 which immediately generated an investment tax
credit of $21,250 as well as deductions equal to the amount of
all lease payments made should have prompted petitioner to look
beyond the promotional materials and to investigate the economic
viability of the venture. See Allen v. Commissioner, 925 F.2d
348, 353 (9th Cir. 1991), affg. 92 T.C. 1 (1989) (taxpayers
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