- 12 - sale of an investment. Rather, he was integrally involved in the partnership, and consequently petitioners’ reliance on any advice from him was not reasonable. We are convinced that petitioner intended to make an actual investment in Yuma Mesa and not merely derive a tax benefit therefrom. Petitioner, for example, performed some investigation into the potential of jojoba prior to investment, monitored the investment after it was made, and made payments to the partnership in an amount greater than the tax benefits expected to be derived. We nevertheless find that petitioner was negligent within the meaning of section 6653(a) with respect to taxable year 1982. First, despite petitioner’s substantial business background in both academia and the business world, he did not make any financial projections for the investment, and he did little to investigate the investment beyond a limited inquiry into the uses of and possible demand for jojoba. Second, petitioner participated in an investment which was organized and promoted by tax lawyers, and which involved warnings in the private placement memorandum concerning tax risks and the need to obtain legal advice. In addition, petitioner claimed a $23,174 ordinary loss for 1982, despite the fact that he had invested only $9,782 in cash in the partnership via a subscription agreement dated December 30, 1982; such a disproportionate and accelerated loss should also have alerted petitioner to the needPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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