- 71 -
an independent appraiser or expert, but his suggestion went
unheeded.
Sann acknowledged that he relied "to a large extent,
probably too much, on the contents of the offering memorandum and
the expert opinions" appended thereto. Addington did little more
than discuss the investment with Maxfield. Cohn reviewed the
offering materials and spoke with others at Sann & Howe.
Petitioners and Maxfield did not in good faith investigate the
fair market value of a Sentinel EPE recycler, or the underlying
viability, financial structure, and economics of the Partnership
transactions. Their reliance on the offering materials and
interested persons was not reasonable. In Cohn's words, "how
could we be so stupid * * * it certainly was mea culpa time." We
hold, upon consideration of the entire records, that petitioners
are liable for the negligence additions to tax under section
6653(a)(1) and (2) for the taxable years at issue. Respondent is
sustained on this issue.
C. Section 6659--Valuation Overstatement
In all six notices of deficiency, respondent determined that
petitioners were liable for the section 6659 addition to tax on
the portions of their respective underpayments attributable to
valuation overstatement. Petitioners have the burden of proving
that respondent's determinations of the section 6659 additions to
tax in their cases are erroneous. Rule 142(a); Luman v.
Commissioner, 79 T.C. at 860-861.
Page: Previous 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 NextLast modified: May 25, 2011