Jeffrey I. and Roberta H. Stone - Page 20

                                       - 20 -                                         
          Commissioner, 949 F.2d 401 (10th Cir. 1991); Marine v.                      
          Commissioner, 92 T.C. 958, 992-993 (1989), affd. without                    
          published opinion 921 F.2d 280 (9th Cir. 1991); McCrary v.                  
          Commissioner, 92 T.C. 827, 850 (1989); Rybak v. Commissioner, 91            
          T.C. 524, 565 (1988).  We have rejected pleas of reliance when              
          neither the taxpayer nor the advisers purportedly relied upon by            
          the taxpayer knew anything about the nontax business aspects of             
          the contemplated venture.  Beck v. Commissioner, 85 T.C. 557                
          (1985); Flowers v. Commissioner, 80 T.C. 914 (1983); Steerman v.            
          Commissioner, T.C. Memo. 1993-447.                                          
               Based upon our review of the entire records in these cases,            
          we hold that Stone's purported reliance on Tomasetti, and Cote's            
          purported reliance on Frabotta and Omohundro, and through them              
          Tomasetti, was not reasonable, not in good faith, nor based upon            
          full disclosure.  Neither petitioners, nor their supposed                   
          advisers, nor anyone affiliated with them had any education or              
          work experience in plastics materials or plastics recycling.                
          Neither petitioners nor their supposed advisers consulted any               
          independent experts or conducted anything approaching a                     
          meaningful investigation.  In addition, it is clear that                    
          Tomasetti had serious concerns regarding the recycler's purported           
          value, and nothing in the records indicates that his concerns               
          were not communicated to petitioners.                                       
               Frabotta's purported investigation entailed speaking to a              
          client contact at Global Marine about the price of oil, a review            

Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011