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United States, 72 AFTR 2d 93-6443, 93-2 USTC par. 50,585 (D.
Ariz. 1993). This Court declined to sustain the negligence
additions to tax in the Reile and Davis cases for reasons
inapposite to the facts herein. In the Davis case, the taxpayers
reasonably relied upon a "trusted and long-term adviser" who was
independent of the investment venture, and the offering materials
reviewed by the taxpayers did not reflect that the principals in
the venture lacked experience in the pertinent line of business.
In the Reile case, the taxpayers, a married couple, had only one
year of college between them and characterized themselves as
financial "dummies." In contrast to those cases, petitioners
herein are well educated, sophisticated, and successful
professional and business people. Their reliance on Becker,
Steele, and/or Sprague with respect to the essential valuation
issue and the economic viability and bona fides of the
Partnership transactions was misplaced and inconsistent with
Becker's disclosure of the limitations of his investigation.
Although Blount did not talk to Becker, Sprague related to Blount
the particulars of Becker's investigation. In addition, the
offering memoranda disclosed that the Partnerships had no prior
operating history and that the general partner had no prior
experience in marketing recycling or similar equipment.
Accordingly, petitioners' reliance on the Reile and Davis cases
is misplaced.
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