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would retain more than or less than 50 percent of the obligation
to Mitchell.
On or about June 21, 1983, petitioner and Fields came to
terms memorialized in an assignment of interest document.
Petitioner purchased Fields' interest in Mid Continent by paying
the final $10,000 capital call plus $600 interest and by assuming
half of the $120,000 obligation to Mitchell.
Preparation of the 1983 and 1984 Returns
Corman subsequently prepared petitioners' 1983 Federal
income tax return. Petitioners claimed an ordinary loss of
$46,007 and an investment credit of $190 reflecting their share
of Mid Continent losses and credits based upon the Schedule K-1
provided to them by the partnership.4 Corman also prepared
petitioners' 1984 return, on which they claimed a Mid Continent
partnership loss of $1,633.5
The record does not reflect that petitioner made any further
inquiry about or investigation into the operations of Mid
Continent, even after he received notification in 1985 that the
partnership was suing its accountants. Eventually, in early 1986
4In addition, petitioners reported partnership losses from
"Hotel Associates of High Point" and GeoVest B, as well as
partnership gains from GeoVest A and "Greene Whiteside Co".
5In addition, petitioners reported partnership gains from
"Greene Whiteside Co" and GeoVest A, and partnership losses from
GeoVest B, "Hotel Associates of High Point", "1600 Market Street
Associates", "Elm Street Associates I", and "Ambassador Real
Estate Investors L.P."
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