- 6 -
device) was worth about $64,000 to $76,000. Petitioner's claim
for a refund reflects a cost basis of $990,000 for the energy
device, so that petitioner's 16.667-percent share of the cost
would have been $165,003. Petitioner did not physically examine
the energy device or determine whether the value or price was
appropriate. Mr. Chalich also acquired a 17.244-percent interest
in Evergreen.
At the time of making the investment in Evergreen,
petitioner earned about $28,000 from his teaching, and his net
worth was less than $100,000. Petitioner had some investment
experience by means of involvement in an investment club through
which shares of stock had been acquired. Prior to investing,
petitioner did not make any specific inquiries concerning the
energy device or its use. Petitioner generally discussed heating
costs with the school custodian where he worked. Other than
people connected with Professional, petitioner did not consult
with anyone specifically qualified with respect to the technology
underlying the energy device or tax ramifications concerning the
investment. Prior to investing in Evergreen, petitioner did not
consult with attorneys or accountants in connection with income
tax matters, including the preparation of his income tax return.
Petitioner and his former wife (Sally Upchurch) went to Dave
Shriver (Mr. Shriver), an accountant, to discuss whether the
investment in the energy device transaction packaged by Saxon was
a viable investment and whether the tax aspects were proper.
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