Charles A. Greene and Christine J. Greene - Page 22

                                       - 22 -                                         

          the retail and manufacturing sides of the furniture industry with           
          whom he could discuss his new venture.  Petitioner was well aware           
          of what was required for a businesslike approach in order to make           
          an informed investment.                                                     
               Any investment advice that Corman provided to petitioner               
          about Mid Continent was based solely on Corman's reading of the             
          prospectus and his experience in other than oil and gas ventures.           
          But to accurately report the Mid Continent deductions and credits           
          for 1983 and 1984 required verifying facts outside and                      
          independent of the documents presented to Corman.  Petitioners              
          have not shown that it was Corman's responsibility to verify                
          those facts.  See David v. Commissioner, 43 F.3d 788, 789 (2d               
          Cir. 1995), affg. T.C. Memo. 1993-621; Daugherty v. Commissioner,           
          78 T.C. 623, 641 (1982).  Petitioners cannot avoid the negligence           
          additions to tax "merely because a tax adviser has read the                 
          prospectus and advised that it is feasible from a tax                       
          perspective, assuming the facts presented are true."  Rogers v.             
          Commissioner, T.C. Memo. 1990-619; accord Novinger v.                       
          Commissioner, T.C. Memo. 1991-289.                                          
               Petitioner argues that there was nothing about the                     
          investment that put him on notice that "second-guessing" his                
          accountant's advice was necessary.  The tax losses generated by             
          the investment were not "too good to be true", he argues.  But              
          for $10,000 petitioner, a high tax bracket taxpayer, purchased              

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011