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generated the tax benefits in these cases. Maxfield testified
that he explained the tax benefits to petitioners and warned them
that he was relying upon the offering materials, and in
particular the reports of Ulanoff and Burstein appended thereto,
for the value of the recyclers. Because he was not an engineer
and had no expertise in plastics materials or plastics recycling,
Maxfield cautioned that he did not know if the representations in
the offering materials were true, and that the only way to know
with any certainty would be to hire an independent expert or
appraiser. However, petitioners and Maxfield did not hire a
plastics engineering or technical expert with respect to the
Plastics Recycling transactions. In the end, petitioners and
Maxfield relied exclusively on the offering materials and
insiders to the transactions for the value and purported
uniqueness of the machines.
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 section 6659, 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
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