- 53 -
Accordingly, petitioners will not be relieved of the negligence
additions to tax based upon the decisions in the Durrett and
Chamberlain cases by the Court of Appeals for the Fifth Circuit.
4. Conclusion as to Negligence
Under the circumstances of these consolidated cases,
petitioners failed to exercise due care in claiming large
deductions and tax credits with respect to the Partnerships on
their Federal income tax returns. Petitioners did not read the
offering materials or otherwise learn about or independently
investigate the Plastics Recycling transactions aside from
speaking with Alter and Feinstein. Alter and Feinstein are not
investment planners and they did not perform such services for
petitioners. Petitioners' purported advisers had no education or
experience in plastics materials or plastics recycling and
ultimately relied upon the offering materials with respect to the
capabilities and market demand for the machines. We hold that
petitioners did not reasonably rely upon Alter and Feinstein.
The records in these cases indicate that Alter and Feinstein knew
that the tax benefits were contingent upon the purported value of
the Sentinel EPE recycler, and that they explained all that they
had learned to petitioners. Yet neither petitioners nor their
18(...continued)
the court to which appeal in the Kaliban, Roland, and Zimmer
cases lies. See Golsen v. Commissioner, 54 T.C. 742, 756-758
(1970), affd. 445 F.2d 985 (10th Cir. 1971).
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