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and suggested instead that petitioner consult a tax attorney.
Accordingly, petitioner sought out Gerald Thompson (Thompson), a
young attorney who was affiliated with Krandle, Thompson & Mier
P.C. (KT&M), a small law firm in Livonia, Michigan.9 The firm’s
brochure indicated that the firm specialized in all areas of
business and corporation law and taxation. Neither KT&M nor
Thompson had any relationship with either Winer or Whitman.
Petitioner provided Thompson with copies of the Whitman
offering memorandum and his Schedule K-1.
Thompson did not have any specialized knowledge regarding
the plastics recycling industry, and he did not have any
specialized knowledge regarding the nontax business aspects of
petitioner’s Sentinel EPS recycler investment. Further, Thompson
did not make any independent attempt to evaluate the Whitman
partnership or to value the EPS recycler; rather, he confined
himself to the offering memorandum and petitioner’s Schedule K-1.
As an attorney, Thompson did not consider himself qualified
to provide investment advice, and his practice was not to provide
such advice. Thompson did not provide petitioner with any
investment advice. Rather, Thompson provided petitioner with a
2-page letter dated April 4, 1983 (Thompson’s letter), together
with a completed Form 3468 (Computation of Investment Credit) and
a copy of an article on partnership audits.
9 Thompson was the son of one of the firm’s named partners.
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