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Partnerships, particularly in view of their lack of effort to
learn about or independently investigate the Plastics Recycling
transactions prior to investing in them.
Petitioners cite a number of cases in support of their
positions, but primarily rely on Balboa Energy Fund 1981 v.
Commissioner, 85 F.3d 634 (9th Cir. 1996), affg. in part and
revg. in part without published opinion Osterhout v.
Commissioner, T.C. Memo. 1993-251; Durrett v. Commissioner, 71
F.3d 515 (5th Cir. 1996), affg. in part and revg. in part T.C.
Memo. 1994-179; Chamberlain v. Commissioner, 66 F.3d 729 (5th
Cir. 1995), affg. in part and revg. in part T.C. Memo. 1994-228;
Wright v. Commissioner, T.C. Memo. 1994-288; Wood v.
Commissioner, T.C. Memo. 1991-205; Davis v. Commissioner, T.C.
Memo. 1989-607; Mollen v. United States, 72 AFTR 2d 93-6443, 93-2
USTC par. 50,585 (D. Ariz. 1993).
Petitioners' reliance on the Wright, Wood, and Davis cases,
wherein this Court declined to sustain the negligence additions
to tax, is misplaced. In the Wright case, the taxpayers, who
suddenly had acquired wealth after a lifetime of modest earnings,
relied upon a well-recommended financial planner who expressly
recommended the subject investment as part of an overall plan
that included a variety of investments. The taxpayers reviewed
the offering memorandum and were advised that the investment
partnership already had been audited by the IRS and that the
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