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benefits might expose his investment to be the tax shelter it
clearly was. In this regard, we are convinced that petitioner
consulted Thompson in order to provide “cover” and
“plausibility”; likewise, we are convinced that petitioner was
determined to “interpret” whatever advice that he received as
justification for the tax benefits that he had purchased.
In sum, we do not think that petitioner’s professed reliance
on Thompson was reasonable. See, e.g., Addington v.
Commissioner, 205 F.3d 54 (2d Cir. 2000), affg. Sann v.
Commissioner, T.C. Memo. 1997-259.
D. Other Matters
Petitioners contend that investors such as themselves should
not be burdened with the obligation of performing independent
investigations of the ventures in which they invest. In
petitioners’ view, such a requirement would impose an economic
burden and prevent taxpayers such as themselves from investing.
As applicable to the present cases, however, this argument is
flawed in that it virtually presumes, among other things that:
Petitioner should not have been expected to carefully read the
offering memorandum; petitioner should not have been expected to
consider the numerous caveats and warnings regarding the business
and tax risks inherent in the Whitman investment; petitioner was
not principally motivated by the prospect of receiving immediate
tax benefits in excess of his investment; and petitioner was
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