- 8 -
put $5,500 into a scheme that promised for the first year $3,5873
in tax credits and $4,298 in ordinary deductions and reduced his
income tax liability to zero.4 As far as this record indicates,
petitioner made this investment without the slightest notion of
how the recyclers, in which he had indirectly invested, worked.
Furthermore, as courts have frequently noted, during this period
there was extensive publicity concerning questionable tax
shelters. See, e.g., Freytag v. Commissioner, 89 T.C. 849, 888
(1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868
(1991).
These facts require a “reasonable and prudent” person at
least to seek advice from persons who have knowledge concerning
the investment. The only people with whom petitioner spoke
concerning SAB were Messrs. Sullivan and Masak, and it is agreed
that they had no such expertise. Petitioner, therefore, cannot
deflect his own culpability onto other shoulders.
We also reject petitioner’s argument that the small amount
of his investment militated against seeking further information
because of the costs that would have been involved. Having
claimed bogus tax deductions and credits, he must bear
responsibility for his actions. The long and short of the matter
3 Petitioner’s 1982 income was such that he claimed only a
credit in the amount of $2,814; the unused portion of the credit,
however, may have been carried back or forward. See sec. 46(b).
4 Petitioner did have a liability for self-employment taxes.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011