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his experience and the nature of the investment or business. See
Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973).
When considering the negligence addition to tax, we evaluate the
particular facts of each case, judging the relative
sophistication of the taxpayers, as well as the manner in which
they approached their investment. McPike v. Commissioner, T.C.
Memo. 1996-46. Compare Spears v. Commissioner, T.C. Memo. 1996-
341 with Zidanich v. Commissioner, T.C. Memo. 1995-382.
Petitioners contend that they were reasonable in claiming
deductions and credits with respect to Northeast. They maintain
that petitioner "conducted a good faith investigation of the
Northeast transaction and did not merely rely on the offering
memorandum or other materials supplied by the investment vendor."
Petitioners further assert that they reasonably expected to make
a profit from Northeast because plastic is an oil derivative and
the United States was experiencing a so-called oil crisis during
the latter 1970's and early 1980's.
Petitioner's educational background and professional
experience should have enabled him to make a reasonable and
informed assessment of the Sentinel EPE recycler and the
Northeast transaction. His own testimony is that he reviewed the
offering memorandum repeatedly; visited PI and viewed a
demonstration of the machine; spoke with members of WMDI,
Roberts, Bambara, and Celanese personnel; and analyzed the
economics of the transaction. However, the record in this case,
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