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long-term adviser who was a tax attorney and accountant, and who
in turn relied on a promoter of the venture, held unreasonable),
affd. 79 F.3d 726 (8th Cir. 1996); Kozlowski v. Commissioner,
T.C. Memo. 1993-430 (reliance on adviser held unreasonable absent
a showing that the adviser understood the transaction and was
qualified to give an opinion whether it was bona fide), affd.
without published opinion 70 F.3d 1279 (9th Cir. 1995); Freytag
v. Commissioner, 89 T.C. 849 (1987) (reliance on tax advice given
by attorneys and C.P.A.'s held unreasonable absent a showing that
the taxpayers consulted any experts regarding the bona fides of
the transactions), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501
U.S. 868 (1991). Here we have found that none of the advisers
consulted by petitioners possessed sufficient knowledge of the
plastics recycling business to render a competent opinion. This
factor has been deemed relevant by the Court of Appeals for the
Second Circuit, the Court to which appeal in these cases lie.
See David v. Commissioner, 43 F.3d at 789-790 (taxpayers'
reliance on expert advice not reasonable where expert lacks
knowledge of business in which taxpayers invested); Goldman v.
Commissioner, 39 F.3d at 408 (same). Accordingly, we will not
relieve petitioners of the negligence additions to tax on the
basis of petitioners' reliance on the Court of Appeals' decisions
in the Durrett and Chamberlain cases.
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