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number of questions which I answered for him, and apparently
based on that he made his decision to invest." (Emphasis added.)
The Zenkels are not unsophisticated investors. On their 1982
return, they reported dividend income in the amount of $146,644
and net long-term capital gains in the amount of $155,144.
Petitioners assert that they relied upon one or more members
of the accounting firm of Becker Co., and in particular on its
founder and principal owner Stuart Becker, to investigate the tax
law and the underlying business circumstances of a proposed
investment. In the Blount case, petitioner placed reliance on
this firm only indirectly or secondhand, through Sprague.
Becker, who is experienced in tax matters, 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 his knowledge and investigation of the transaction.
For reasons set forth below, we believe the latter statement more
accurately describes what happened here.
a. The Circumstances Under Which a Taxpayer
May Avoid Liability Under Section 6653(a)(1)
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