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negligent where tax savings were almost double the amount of
their cash outlay). Petitioner's alleged investigation of the
music industry was superficial at best and does not represent a
due diligence inquiry into the specifics of the Southampton
investment. In addition, petitioner's limited correspondence
with Indigo and Southampton does not demonstrate a concern for
the economic viability of the master recording investment.
There is no evidence that petitioner investigated the bona fides
of the Southampton program or that he was concerned with
anything other than the tax benefits involved. If petitioner
had conducted his own good faith investigation, he would have
discerned strong reasons to conclude that the Southampton
investment program was not bona fide and was designed primarily
for tax-avoidance purposes.
Finally, petitioner's reliance on Heasley v. Commissioner,
902 F.2d 380 (5th Cir. 1990), revg. T.C. Memo. 1988-408, as
authority for his position that his actions were reasonable is
misplaced. The taxpayers in Heasley were uneducated and had
extremely limited investment experience. Moreover, the U.S.
Court of Appeals for the Fifth Circuit indicated that the
taxpayers in Heasley both intended to earn an economic profit on
the investment in issue and actively monitored that investment.
We cannot reach similar conclusions in the present case.
Petitioner herein was highly educated, had worked in the area of
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