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1987. The amount of recourse debt which decedent was required to
assume totaled $923,630.
Decedent met Robert Michaels (Mr. Michaels) in the early
1980's. Mr. Michaels was a certified public accountant,
practicing income tax and general accounting since 1969, worked
in an accounting firm, and directed staff.
Mr. Michaels learned of the partnership from a client, then
told decedent about it. Decedent consulted with Mr. Michaels
concerning the investment in the partnership. Mr. Michaels
reviewed the POM, including the opinion letter; he also was of
the opinion that a partner would be at-risk for the amount of
partnership debt which a partner was required to assume.
Mr. Michaels consulted with decedent's tax counsel, David
Weinstein (Mr. Weinstein), about the investment. Based
on this consultation with Mr. Weinstein, the opinion letter in
the POM, and his own analysis, Mr. Michaels approved the
investment, which decedent then made.
Mr. Michaels prepared for decedent and Mrs. Bradley joint
Federal income tax returns for the taxable years which included
the deductions at issue, 1984, 1985, and 1986.
Procedural Background
Decedent filed Form 1045 (regarding loss carrybacks to
previous years) for the taxable year 1985 on or before
September 26, 1986, and filed Form 1045 for the 1986 taxable year
on or before October 5, 1987. Respondent issued a notice of
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