- 36 -
958 (1989), affd. without published opinion 921 F.2d 280 (9th
Cir. 1991).
Thus, it was not reasonable for petitioners to claim
substantial tax credits and a partnership loss on the basis of
reports contained in the Clearwater private offering memorandum;
and, there is no indication that petitioners obtained
professional advice from an individual with the requisite
expertise and knowledge of the pertinent facts to provide
informed advice regarding the claimed partnership loss and tax
credits. Cf. David v. Commissioner, 43 F.3d 788, 789-790 (2d
Cir. 1995), affg. per curiam T.C. Memo. 1993-621; Goldman v.
Commissioner, 39 F.3d 402 (2d Cir. 1994); Freytag v.
Commissioner, 89 T.C. 849 (1987). Therefore, petitioners did not
act reasonably in claiming tax benefits relating to the
Clearwater investment.
C. Conclusion Regarding Negligence
In view of petitioner's sophistication, petitioner knew or
should have known that the Sentinel EPE recyclers were not
unique, that they were not worth more than $50,000 each, and that
Clearwater lacked economic substance and had no potential for
profit. Therefore, under the circumstances of this case,
petitioners failed to exercise due care in claiming a partnership
loss deduction and substantial tax credits with respect to
Clearwater. Taking all of the above factors into consideration,
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