Robert P. Neumann and Sally A. Neumann - Page 7

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               Petitioners contend that in addition to relying on the                 
          prospectus, the tax opinion presented by Henry Nunez (Nunez), who           
          was legal counsel on behalf of Encore Leasing, and Orsi's due               
          diligence, they sought the independent advice of their attorney             
          and accountant.  We have stated above that reliance on                      
          representations by insiders, promoters, or offering materials               
          generally is not an adequate defense to negligence.  Gollin v.              
          Commissioner, supra.  It is clear that Orsi was a promoter.  At             
          the very least, both Orsi and Nunez were insiders.  Any                     
          information they provided petitioners regarding investment                  
          opportunities in the Alamo partnerships was self-serving.  As the           
          promoter, Orsi had a stake in whether the Alamo partnerships were           
          successful in securing investors.  Thus, Orsi had an inherent               
          conflict of interest.  Under these circumstances, petitioners               
          cannot show that Orsi reached his decisions independently when he           
          advised them.  Orsi cannot be considered a disinterested source.            
          Petitioners' reliance on Orsi was not objectively reasonable.               
          Notwithstanding that petitioners failed to produce a copy of any            
          prospectus or any tax opinion prepared by Nunez, petitioners'               
          reliance on such material also cannot be said to be reasonable.             
          Reliance on offering materials is not an adequate defense to                
          negligence.  Gollin v. Commissioner, supra.                                 
               As for petitioners' contention that they are not liable for            
          the additions to tax due to negligence because they relied on the           





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