Norman H. Fawson and Mary Jane B. Fawson - Page 2

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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             
               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.                         
               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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