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affd. without published opinion sub nom. Cowles v. Commissioner,
949 F.2d 401 (10th Cir. 1991). Advice from such individuals “is
better classified as sales promotion”. Vojticek v. Commissioner,
T.C. Memo. 1995-444. The rationale for this view is based on the
insider’s or promoter’s self-interest, which makes such “advice”
inherently suspect. See Addington v. Commissioner, 205 F.3d at
59 (“It is unreasonable for taxpayers to rely on the advice of
someone who they should know has a conflict of interest.”);
Goldman v. Commissioner, 39 F.3d at 408; LaVerne v. Commissioner,
supra at 652-653.
In the present cases, Winer’s self-interest is clearly
demonstrated by the offering memorandum. Thus, the offering
memorandum stated: (1) Winer would receive a 1-percent interest
in “all items of income, gain, deduction, loss or credit arising
from the operations of the Partnership”; (2) Winer would receive
$62,000 for administrative and other services to be paid from the
proceeds of the private placement offering as “management fees”;
(3) Whitman would pay “fees of purchaser representatives and
selling commissions” from the proceeds of the offering in an
amount equal to 10 percent of the aggregate price of the units;
and (4) Winer could “retain as additional compensation all
amounts not paid as purchaser representative fees or sales
commissions in connection with the Offering”. The incentives to
Winer to tout the investment were therefore readily apparent.
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