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selling and managing interests in Jojoba, yet they did not
endeavor to independently examine or monitor this investment or
otherwise seek independent advice regarding the tax consequences
of their investment. It is unreasonable to make investment
decisions based solely on the advice of an interested party.
Hill v. Commissioner, T.C. Memo. 1993-454. The Myerses neglected
to seek any independent advice although the offeree
questionnaire, subscription agreement, and PPM repeatedly urged
petitioners to do so and were replete with warnings of the risks
associated with the investment and its tax consequences.
Petitioners have not demonstrated that the Myerses exercised
reasonable care in deciding whether to invest in Jojoba and how
to report the tax consequences of that investment or that they
reasonably relied on Mr. Matsuda’s advice regarding the Jojoba
investment. Accordingly, we hold that petitioners are liable for
the additions to tax for negligence under section 6653(a) with
respect to the underpayments for the taxable years before us.
III. Conclusion
We have carefully considered all remaining arguments made by
petitioners for contrary holdings and, to the extent not
discussed, conclude they are irrelevant or without merit.
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