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Sprague's investigation of Phoenix consisted of reading the
offering memorandum and talking to Leicht and Becker. Blount has
not shown that his tax return preparer, Gowin, possessed the
requisite expertise in recycling or the plastics industry to have
enabled her properly to evaluate the merits of the Phoenix
transaction. In light of the foregoing, Blount will not be
relieved of the negligence additions to tax based upon his
purported reliance on Sprague and Gowin.
Mr. and Mrs. Zenkel each discussed the investment with
Steele. Neither Steele nor Mr. Zenkel testified in docket No.
12091-89. Mrs. Zenkel could not recall the content of her
conversations with Steele; she remembered only that he told her
that the investment had tax benefits and that he responded
positively when she asked him if SAB Reclamation was a worthwhile
investment. Mrs. Zenkel testified that she did not know that
Becker Co. was involved in tax-oriented investments, whether
Steele had any background in plastics materials or plastics
recycling, whether Becker or Steele investigated PI, whether they
investigated and/or compared the recycler with any similar
products, whether they investigated end-users, or whether either
of them checked with independent plastics experts as to the value
of the recycler. Mrs. Zenkel testified that if she had known any
of the particulars of Becker's and Steele's investigation, she
has since forgotten them. The record in docket No. 12091-89 does
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