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business aspects of petitioner’s Sentinel EPS recycler
investment. Thompson was therefore in no position himself to
evaluate either the technology of the Sentinel EPS recyclers or
whether the Whitman partnership was a viable economic enterprise.
See, e.g., Addington v. Commissioner, 205 F.3d at 58 (“In
general, it is unreasonable to rely on an adviser who lacks
knowledge about the industry in which the taxpayer is
investing.”).
Third, Thompson did not make any independent attempt to
evaluate either the technology of the EPS recyclers or whether
the Whitman partnership was a viable economic enterprise. He was
therefore in no position to opine on either of these matters.
Fourth, Thompson had no knowledge of the value of the
Sentinel EPS recyclers, and he made no independent attempt to
determine their value. Yet Thompson recognized, and he so
advised petitioner, that “the fair market value * * * of the
Sentinel EPS Recyclers * * * is * * * the starting point for
determining the amount of credits available to the Partnership.”
Fifth, Thompson based his advice solely on the materials
furnished to him by petitioner, namely, the offering memorandum
and the 1982 Schedule K-1.
Sixth, Thompson regarded the Whitman investment to be
“aggressive”, and he so advised petitioner. At trial, Thompson
described what “aggressive” meant:
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