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$3,000. At the very least, the fact that a $3,000 investment
yielded a $15,432 loss deduction for the year of the investment
should have alerted petitioners that their deductions were "too
good to be true." McCrary v. Commissioner, 92 T.C. 827, 850
(1989). We find that petitioners' actions, in failing to conduct
anything approaching a meaningful investigation of Irving & Co.,
were not the actions that a reasonable and ordinarily prudent
person would have taken under the circumstances.
Petitioner also testified the reason why they invested in
Irving & Co. was to make money, and not because it was a tax
shelter. However, the evidence clearly supports a finding that
petitioners invested in Irving & Co. because it was a tax
shelter. This evidence includes: (1) A May 29, 1986 letter from
Schneider to petitioner that states "Now is the time to plan your
tax shelters for 1986"; (2) a July 7, 1986 handwritten letter
from Schneider to petitioner that states "You can expect tax
savings per our discussion"; and (3) petitioners' check
transaction register indicating a $3,000 payment that states, in
petitioner's own handwriting, "Fred Schneider 1986 Tax Shelter".
We are convinced that petitioners knew they were participating in
a tax shelter. Nevertheless, petitioners' reliance on
Schneider's advice, as the tax shelter promoter, is not
reasonable or prudent. Goldman v. Commissioner, supra at 408.
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