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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 need
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