Richard L. and Kathryn Dyckman - Page 7




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          connection with the transactions.  See Henry Schwartz Corp. v.              
          Commissioner, 60 T.C. 728, 740 (1973).  In this regard, the                 
          determination of negligence is highly factual.  "When considering           
          the negligence addition, we evaluate the particular facts of each           
          case, judging the relative sophistication of the taxpayers as               
          well as the manner in which the taxpayers approached their                  
          investment."  Turner v. Commissioner, T.C. Memo. 1995-363.                  
               There are a number of special and unusual circumstances                
          present in petitioners' case that in combination provide a                  
          reasonable basis for petitioners' actions.  The special and                 
          unusual circumstances include petitioners' complete lack of                 
          sophistication in investment matters as well as the long-term               
          special relationship of trust and friendship that existed between           
          petitioners and their C.P.A..  Cf. Schwalbach v. Commissioner,              
          111 T.C. 215, 230-231 (1998); Zidanich v. Commissioner, T.C.                
          Memo. 1995-382.                                                             
               Petitioners are a carpet salesman and an elementary school             
          teacher who did not have any independent investment experience.             
          They are unsophisticated investors who relied on their C.P.A., a            
          trusted friend and a knowledgeable professional.  Because of his            
          reputation and status, petitioners surmised that Mr. Kipness had            
          the expertise to choose an appropriate investment for them.                 
          Because of their friendship, petitioners were confident that Mr.            
          Kipness would do all that was necessary to protect their                    
          investment.  In sum, petitioners relied in good faith on a                  
          financially savvy accountant and their long-time friend to act in           

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