- 18 - neither engaged in a trade or business nor conducting research and development, either directly or indirectly. Additionally, the offering made clear that the general partner, Mr. Matsuda, had no experience in jojoba research and development. Also, it is apparent from the evidence presented that Mr. Matsuda had minimal involvement in the partnership. Petitioners are precluded from relying upon a "lack of warning" as a defense to negligence when there is no evidence that a reasonable investigation was ever made, and the offering materials contained many warnings of the tax risks associated with the investment. On this record, the Court finds that petitioners did not exercise the due care of reasonable and ordinarily prudent persons under the circumstances. Consequently, the Court holds that petitioners are liable for the negligence additions to tax under section 6653(a)(1) and (2) for each of the years at issue. Respondent is sustained on this issue. To the extent the Court has failed to address an argument of petitioners herein, the Court concludes such argument is without merit. Reviewed and adopted as the report of the Small Tax Case Division. Decision will be entered for respondent.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Last modified: May 25, 2011