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credits with respect to Resource on their 1981 Federal income tax
return. Petitioner knew little about Resource. He did not
thoroughly review the offering memorandum or seek explanation of
the portions that he did not understand. Neither the attorney
who informed him of Resource nor the accountant who reviewed the
offering memorandum had any experience or expertise in plastics
materials or plastics recycling. Moreover, the accountant did
not research or investigate any of the representations in the
offering memorandum, and petitioner did not learn what, if
anything, the attorney had done. Petitioner did not even know
whether the attorney was soliciting the investment for a
commission. We hold, upon consideration of the entire record,
that respondent has satisfied the burden of proof and that
petitioners are liable for the negligence additions to tax under
section 6653(a)(1) and (2) for 1981. Respondent is sustained on
this issue.
B. Section 6659--Valuation Overstatement
In the amended answer, respondent asserted that petitioners
were liable for the section 6659 addition to tax on the portion
of their underpayment attributable to valuation overstatement.
Because the section 6659 addition to tax was raised for the first
time in the amended answer, respondent has the burden of proof.
Rule 142(a); Vecchio v. Commissioner, 103 T.C. at 196; Bagby v.
Commissioner, 102 T.C. at 612.
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