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relied upon the offering memoranda for the value of the machine.
In their meetings with petitioners, Alter and Feinstein explained
all that they had learned of the Plastics Recycling transactions,
including the nature and amounts of the tax benefits. In the
end, neither petitioners nor their purported advisers in good
faith investigated the fair market value of a Sentinel EPE
recycler, or the underlying viability, financial structure, and
economics of the Partnership transactions.
In support of their contention that they acted reasonably,
petitioners cite Mauerman v. Commissioner, 22 F.3d 1001 (10th
Cir. 1994), revg. T.C. Memo. 1993-23. However, the facts in the
Mauerman case are distinctly different from the facts of these
cases. In Mauerman, the Court of Appeals for the Tenth Circuit
held that the Commissioner had abused discretion by failing to
waive a section 6661 addition to tax. Like the section 6659
addition, a section 6661 addition to tax may be waived by the
Commissioner if the taxpayer demonstrates that there was
reasonable cause for his underpayment and that he acted in good
faith. Sec. 6661(c). The taxpayer in Mauerman relied upon
independent attorneys and accountants for advice as to whether
payments were properly deductible or capitalized. The advice
relied upon by the taxpayer in Mauerman was within the scope of
the advisers' expertise, the interpretation of the tax laws as
applied to undisputed facts. In petitioners' cases, however,
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