- 37 -
advisers purportedly relied upon by the taxpayer knew anything
about the nontax business aspects of the contemplated venture.
Goldman v. Commissioner, supra; Freytag v. Commissioner, supra;
Beck v. Commissioner, 85 T.C. 557 (1985); Lax v. Commissioner,
T.C. Memo. 1994-329, affd. without published opinion 72 F.3d 123
(3d Cir. 1995); Steerman v. Commissioner, T.C. Memo. 1993-447;
Rogers v. Commissioner, T.C. Memo. 1990-619.
The concept of negligence and the argument of reliance on an
expert is highly fact intensive. In these cases two remarkably
capable and successful investment advisers, experienced and able
at investigating investment proposals, assert that they relied
upon their accountant to investigate the tax law and the
underlying business circumstances of a proposed investment. The
accountant explains that he made an investigation within the
limits of his resources and abilities and fully disclosed what he
had done. The question here is whether petitioners actually and
reasonably relied on the accountant with respect to valuation
problems requiring expertise in engineering and plastics
technology or whether the accountant gave the tax advice and
facilitated the transaction, but did not make a full and
independent investigation of the relevant business and
technology, and did clearly inform his clients of the limits of
Page: Previous 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 NextLast modified: May 25, 2011