- 42 -
"touched on what we had all learned about the background of the
people, what I had learned by my discussions with people, what
the other partners had learned about the venture and conveyed to
me." As a result of these meetings, petitioners learned about
the nature of the tax benefits, as well as Alter's and
Feinstein's reliance on the offering materials and
representations by insiders for the value of the machines and the
economic viability of the Plastics Recycling transactions.
Neither Alter nor Feinstein had any expertise or experience
in plastics materials or plastics recycling, and petitioners had
no reason to believe otherwise. Alter had no competence to value
the machines, and neither he nor Feinstein independently
confirmed their value or the economic viability of the Plastics
Recycling transactions. The records in these cases show that
petitioners clearly possessed the intelligence and background to
recognize that further investigation was required. A taxpayer
may rely upon his adviser's expertise, but it is not reasonable
or prudent for a taxpayer to rely upon an adviser regarding
matters outside of his field of expertise or with respect to
facts that he does not verify. See David v. Commissioner, 43
F.3d at 789-790; Goldman v. Commissioner, 39 F.3d at 408; Skeen
v. Commissioner, supra; Lax v. Commissioner, T.C. Memo. 1994-329;
Sacks v. Commissioner, supra; Rogers v. Commissioner, T.C. Memo.
1990-619.
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