- 17 -
facility. Storey made no adequate investigation into the value
of the recycler, although, an investigation would have revealed
the existence of other plastics recycling machines available in
1981 and 1982 ranging in price from $20,000 to $200,000. See
Provizer v. Commissioner, T.C. Memo. 1992-177. Despite his lack
of special qualifications and professional skills in plastics
engineering, recycling, or materials, Storey made no effort to
contact or consult with anyone who possessed such qualifications.
Given Storey's background and experience, he undoubtedly was
aware that the tax benefits outlined in the offering memorandum
and claimed by petitioners depended in large part on the value of
the recycling machines. Nevertheless, having no knowledge or
background regarding the value of the machines, he did nothing
sufficient to verify the representations made in the promotional
materials and by individuals associated with the promotion. As
we view the matter, Storey's trips to inspect the machine and the
other aspects of this "investigation" were essentially
superficial. In effect, he relied not upon the information he
gathered through his own investigation, but upon representations
made by Sunbelt's promotional materials and promoters.
Taking the above into consideration, petitioners' reliance
upon Storey was not reasonable. A taxpayer may rely upon his
adviser's expertise, in this case financial planning and tax
advice, but it is not reasonable to rely upon an adviser
regarding matters outside his field of expertise or with respect
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011