- 52 -
See Foulds v. Commissioner, T.C. Memo. 1994-489 (the well-
educated taxpayer failed to establish the substance of advice,
and the purported adviser lacked tax expertise), affd. without
published opinion 94 F.3d 651 (9th Cir. 1996); Chakales v.
Commissioner, T.C. Memo. 1994-408 (reliance on a long-term
adviser, who was a tax attorney and accountant, and who in turn
relied on a promoter of the venture, held unreasonable), affd. 79
F.3d 726 (8th Cir. 1996); Kozlowski v. Commissioner, T.C. Memo.
1993-430 (reliance on an adviser held unreasonable absent a
showing that the adviser understood the transaction and was
qualified to give an opinion whether it was bona fide), affd.
without published opinion 70 F.3d 1279 (9th Cir. 1995); Freytag
v. Commissioner, 89 T.C. at 849 (reliance on tax advice given by
attorneys and C.P.A.'s held unreasonable absent a showing that
the taxpayers consulted any experts regarding the bona fides of
the transactions). The records in the cases before us establish
that Alter and Feinstein did not possess sufficient knowledge of
the plastics or recycling industries to render a competent
opinion.18 See Friedman v. Commissioner, T.C. Memo. 1996-558.
18 This fact has been deemed relevant by the Court of Appeals
for the Second Circuit. See David v. Commissioner, 43 F.3d 788,
789-790 (2d Cir. 1995) (taxpayers' reliance on expert advice not
reasonable where expert lacks knowledge of business in which
taxpayers invested), affg. T.C. Memo. 1993-621; Goldman v.
Commissioner, 39 F.3d 402, 408 (2d Cir. 1994) (same), affg. T.C.
Memo. 1993-480. The Court of Appeals for the Second Circuit is
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