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should have recognized additional warning signs including the
offering’s warnings of tax risks involved with the investment and
the terms of the licensing agreement which canceled the R&D
agreement.
Petitioners did not exercise the due care of reasonable and
ordinarily prudent persons under the circumstances. Accordingly,
we hold that petitioners are liable for the negligence additions
to tax imposed by the provisions of section 6653(a)(1) and (2).
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011