William and Joan Spears - Page 2

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                                      CONTENTS                                        
                                                                      Page            
          MEMORANDUM FINDINGS OF FACT AND OPINION........................2            
          OPINION OF THE SPECIAL TRIAL JUDGE.............................3            
          FINDINGS OF FACT...............................................7            
          A.  The Plastics Recycling Transactions......................7              
          B.  The Partnerships.........................................9              
          C.  Stuart Becker, Steven Leicht, and Noel Tucker...........12              
          D.  Petitioners and Their Introduction to the Partnership                   
          Transactions............................................18                  
          OPINION.......................................................25            
          A.  Section 6653(a) - Negligence............................28              
               1.  The So-Called Oil Crisis............................30             
               2.  Petitioners' Purported Reliance on Becker...........35             
               a.  The Circumstances Under Which a Taxpayer May                       
          Avoid Liability Under Section 6653(a)(1) and (2)                            
          Because of Reasonable Reliance on Competent and                             
          Fully Informed Professional Advice..............35                          
               b.  Petitioners' Investment Experience,                                
                    Sophistication, and Resources...................38                
               c.  Becker's Limited Investigation and Technological                   
                    Knowledge and His Emphasis on Disclosure and on                   
          Protection Against Liability....................40                          
               d.  Conclusion Concerning Petitioners' Alleged                         
          Reliance on Becker..............................46                          
               3.  The Private Offering Memoranda......................48             
               4.  Miscellaneous.......................................53             
               5.  Conclusion As to Negligence.........................57             
          B.  Section 6659 - Valuation Overstatement..................58              
               1. The Grounds for Petitioners' Underpayments..........60              
               2. Concession of the Deficiency........................64              
               3. Section 6659(e).....................................68              
                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
               DAWSON, Judge:  These cases were assigned to Special Trial             
          Judge Norman H. Wolfe pursuant to the provisions of section                 
          7443A(b)(4) and Rules 180, 181, and 183.1  They were tried and              

          1    All section references are to the Internal Revenue Code in             
          effect for the years in issue, unless otherwise indicated.  All             
          Rule references are to the Tax Court Rules of Practice and                  
          Procedure.                                                                  
                                                             (continued...)           




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