- 70 -
business in which taxpayers invested); Goldman v. Commissioner,
39 F.3d at 408 (same). 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.28
5. 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. It was not reasonable for
petitioners to rely on the offering memoranda, insiders to the
transactions, or Maxfield. Maxfield acted as a conveyor of
information and of his impressions, not an investment analyst,
and he stressed that the decision to invest rested with each
individual and not with him. He explained the tax benefits to
petitioners, although these benefits also were clearly explained
in the offering memoranda. Maxfield disclosed that he was
relying on the offering materials for the value of the Sentinel
EPE recycler, and that he did not know whether the
representations therein were true. He mentioned that the only
way to confirm the purported value of the recyclers was to hire
28 Other cases cited by petitioners are inapplicable and
distinguishable for the following general, nonexclusive reasons:
(1) They involve far less sophisticated, if not unsophisticated,
taxpayers; (2) the reasonableness of the respective taxpayers'
reliance on expert advice was established in those cases on
grounds that do not exist here; and (3) the advice given was
within the adviser's area of expertise.
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