- 8 -
their best interest. Given the relationship of the parties and
the level of sophistication involved, petitioners acted
reasonably.
We have also considered other factors in holding
petitioners' actions to be reasonable. For example, petitioners'
sole motivation for making the investment was to provide for
their retirement. Petitioners did not invest as a means to
obtain tax benefits, nor were petitioners even aware that their
investment was in a partnership designed to produce tax benefits.
Hence, petitioners were not motivated by an offering of
improbable tax advantages or sizeable tax deductions. Compare
Wolf v. Commissioner, 4 F.3d 709, 715 (9th Cir. 1993) ("We need
look no farther than * * * [the partnership's] own marketing
literature to hold that the tax court's findings of negligence
are not clearly erroneous: the prospectus focused primarily on
the tax benefits of the investment, and established on its face
that a profit was highly unlikely."), affg. T.C. Memo. 1991-212;
Pasternak v. Commissioner, 990 F.2d 893, 902 (6th Cir. 1993)
(holding reasonably prudent person should investigate claims when
they are likely "too good to be true"), affg. Donahue v.
Commissioner, T.C. Memo. 1991-181; Collins v. Commissioner, 857
F.2d 1383, 1386 (9th Cir. 1988) ("The discussions in the
prospectus of high write-offs and the risk of audits should have
alerted taxpayers that their deductions were questionable at
best."), affg. Dister v. Commissioner, T.C. Memo. 1987-217.
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