- 16 - 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 ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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