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Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th
Cir. 1990), affd. 501 U.S. 868 (1991).
Based on the record, we find that petitioners have not
proved that their reliance on Mr. Santella was reasonable under
the circumstances. There is no evidence in the record that Mr.
Santella was qualified to render a professional opinion to
Josephine and/or Gus as to the business merits and tax
consequences of the Barrister partnership investments.
Petitioners did not establish that Mr. Santella had any
expertise in the publishing industry which he advised petitioners
to invest in for alleged business reasons.4 Although Josephine
and Catherine each testified that the motivation for their
investments was enhanced income flow, neither of them ever voiced
any concern to Mr. Santella over the absence of any income and
eventual complete loss of their $25,000 investments. We find
that petitioners' investment of $25,000 in an industry that
neither they nor their adviser knew anything about without even a
cursory review of the offering materials was negligent.
We are also not convinced that Mr. Santella's advice
regarding the tax consequences of the investment was competent.
In their petitions to this Court, petitioners state that Mr.
Santella mentioned tax benefits which might be obtained from the
investment, for which he had an opinion from legal counsel.
4 Josephine and Catherine also admit to having no
personal knowledge of the publishing industry.
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