Don L. and Lora Christensen - Page 15




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          or analysis.  Petitioners failed to show that Mr. Hulse had the             
          expertise and knowledge of the pertinent facts to provide                   
          informed advice on the investment in Blythe II.  See Freytag v.             
          Commissioner, 89 T.C. at 888.  Accordingly, petitioners failed to           
          establish that their reliance on the advice of Mr. Hulse was                
          reasonable or in good faith.  See Glassley v. Commissioner,                 
          supra.                                                                      
               The Court next examines petitioners' reliance on the advice            
          of Mr. Sheets.  Mr. Sheets had no background or expertise in the            
          areas of agriculture or jojoba plants.  In fact, it appears that            
          nearly all of the previous investments recommended to petitioners           
          by Mr. Sheets had been real estate investments, and Blythe II was           
          the first investment of an agricultural nature advocated by him.            
          More importantly, because Mr. Sheets had a personal profit motive           
          in selling this investment to clients, he had a conflict of                 
          interest in advising petitioners to purchase the limited                    
          partnership interests.10  The advice petitioners allegedly                  
          received from Mr. Sheets fails as a defense to negligence due to            
          his lack of competence to give such advice and the clear presence           
          of a conflict of interest.  See Rybak v. Commissioner, 91 T.C.              




               10   Petitioner acknowledged in his testimony that he knew             
          Mr. Sheets was receiving commissions for finding investors to               
          purchase the limited partnership interests.                                 





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