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due on $10,195. Respondent also determined an addition to tax of
$2,548.75 for a substantial understatement of tax under section
6661.
Petitioners did not contest and have conceded the addition
to tax for a substantial understatement. The issue for decision
is whether petitioners are liable for the additions to tax for
negligence pursuant to section 6653(a)(1) and (2) with respect to
the loss from their investment in the Utah Jojoba I Research
partnership claimed on their 1982 Federal income tax return.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by reference. Petitioners resided in St.
George, Utah, at the time their petition was filed.
Background
Norman Fawson (petitioner) has a degree in genetics and a
medical degree from the University of Utah. He practices family
medicine with a medical group in St. George, Utah. He grew up on
a farm, and in 1979 he purchased approximately 15 acres and
started an apple orchard.
In 1982 petitioners’ financial planner/investment counselor,
Elroy Jones (Mr. Jones), recommended that petitioners invest in
the Utah Jojoba I Research partnership (the partnership). Over
the previous 2 or 3 years, Mr. Jones had set up an investment
plan for petitioners’ retirement, and petitioners had purchased
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