- 39 -
educated taxpayer failed to establish the substance of advice,
and the purported adviser lacked tax expertise), affd. without
published opinion 94 F.3d 651 (9th Cir. 1996); Chakales v.
Commissioner, T.C. Memo. 1994-408 (reliance on long-term adviser,
who was a tax attorney and accountant, and who in turn relied on
a promoter of the venture, held unreasonable), affd. 79 F.3d 726
(8th Cir. 1996); Kozlowski v. Commissioner, T.C. Memo. 1993-430
(reliance on adviser held unreasonable absent a showing that the
adviser understood the transaction and was qualified to give an
opinion whether it was bona fide), affd. without published
opinion 70 F.3d 1279 (9th Cir. 1995); Freytag v. Commissioner, 89
T.C. 849 (1987)(reliance on tax advice given by attorneys and
C.P.A.'s held unreasonable absent a showing that the taxpayers
consulted any experts regarding the bona fides of the
transactions).
Bach did not possess sufficient knowledge of the plastics or
recycling industries to render a competent opinion. This fact
has been deemed relevant by the Court of Appeals for the Second
Circuit. See David v. Commissioner, 43 F.3d at 789-790
(taxpayers' reliance on expert advice not reasonable where expert
lacks knowledge of business in which taxpayers invested), affg.
T.C. Memo. 1993-621; Goldman v. Commissioner, 39 F.3d 402 (2d
Cir. 1994) (same), affg. T.C. Memo. 1993-480. Accordingly,
petitioners will not be relieved of the negligence additions to
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