- 23 -
for 1983 alone $46,007 in tax losses.7 This represents better
than a 4-to-1 writeoff, enough to have put petitioner on "notice
that the investment scheme was primarily for a tax purpose."
Zfass v. Commissioner, 118 F.3d at 190; Barnard v. Commissioner,
731 F.2d 230, 231 (4th Cir. 1984), affg. Fox v. Commissioner, 80
T.C. 972 (1983); see Goldman v. Commissioner, 39 F.3d 402, 407
(2d Cir. 1994) (Mid Continent offering memorandum promised
"improbable tax advantages"), affg. T.C. Memo. 1993-480.
It was a "small" investment, testified petitioner, that did
not warrant an expensive investigation, and besides, he argues,
the problems that caused the partnership to fail were "technical"
in nature. While the investment may have been small to
petitioner, we disagree that a costly investigation was required
to reveal the true nature of the partnership.
Petitioner was not an original investor in Mid Continent
upon its creation in 1981. Unlike Fields, from whom he obtained
his partnership interest in 1983, petitioner had the benefit of 2
years of operations to observe. Petitioner did not have to rely
merely on the representations of the partnership. Petitioner
testified that he "spoke to" other Mid Continent investors in
1983 before buying Fields' interest. The only information they
7In their brief petitioners state that they received a "tax
benefit of $24,000 over two years."
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