Frank K. B. Wheeler - Page 33




                                        -33-                                          
          Little v. Commissioner, 106 F.3d at 1449-1451, 1451-1453.  Osteen           
          does not affect our analysis in the instant case.                           
               For completeness, we note that respondent’s reliance on                
          Sacks v. Commissioner, T.C. Memo. 1994-217, also is misplaced.              
          In Sacks, the taxpayers invested in a tax shelter, the prospectus           
          for which projected that in the first 3 years of the investment             
          the taxpayers would be able to deduct 350 percent of their cash             
          outlay.  The prospectus prominently displayed the fact that the             
          investment had significant tax risks and could well be challenged           
          by the Internal Revenue Service.  We held the taxpayers were                
          liable for the negligence additions to tax, and the Court of                
          Appeals affirmed.  Sacks v. Commissioner, 82 F.3d 918 (9th Cir.             
          1996), affg. T.C. Memo. 1994-217.  There is no indication in the            
          record in the instant case that petitioner’s deductions exceeded            
          his actual cash outlays or that petitioner engaged in his                   
          videotape activity for any substantial tax reduction purpose.               
               We have held, supra, that petitioner did not engage in his             
          videotape activity for profit.                                              
               By the time of the years in issue, a reasonable and                    
          ordinarily prudent person would have sought competent advice on             
          the deductibility of the expenses of this videotape activity.               
          Petitioner failed to make a reasonable attempt to do so.  We                
          conclude, and we have found, on the basis of the preponderance of           
          the evidence, that petitioner was negligent and that the entire             






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