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offering memorandum and persons having a financial connection
with the investment). In the Daoust case, we declined to sustain
the negligence additions to tax because the taxpayer husband,
whose family had some history in farming, reasonably relied upon
the advice of two qualified independent investment advisers and
an independent certified public accountant, who also was the
taxpayer husband's brother. In the cases before us, petitioners
relied on Maxfield, who disclosed that he relied on the offering
materials and persons connected to the investments for the value
of the machines and economic viability of the Partnership
transactions. We find that the facts of petitioners' cases more
closely resemble the facts in the Rasmussen case than the Daoust
case. Petitioners' reliance on the Davis and Daoust cases is
misplaced.
In Mollen, the taxpayer was a medical doctor who specialized
in diabetes and who, on behalf of the Arizona Medical
Association, led a continuing medical education (CME)
accreditation program for local hospitals. The underlying tax
matter involved the taxpayer's investment in Diabetics CME Group,
Ltd., a limited partnership that invested in the production,
marketing, and distribution of medical educational video tapes.
The District Court found that the taxpayer's personal expertise
and insight in the underlying investment gave him reason to
believe it would be economically profitable. Although the
taxpayer was not experienced in business or tax matters, he did
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