- 14 -
Despite his relative inexperience with the deductibility of
research and development expenses, however, Mr. Mathis failed to
conduct any independent investigation to determine whether the
specific research and development proposed to be conducted by or
on behalf of the partnership would have qualified for deductions
under section 174. It is also notable that Mr. Mathis had no
educational background or experience in the area of agricultural
pursuits.
There is no evidence in the record to suggest that
petitioners ever questioned Mr. Mathis about the facts and/or
legal analysis upon which he based his recommendations. Further,
the record is devoid of any evidence that petitioners asked Mr.
Mathis to explain the Blythe II investment to them, particularly
those portions of the offering that they had opted not to read or
apparently were unable to understand.
The facts in these cases are similar to those in Glassley v.
Commissioner, T.C. Memo. 1996-206, in which this Court found that
the taxpayers:
acted on their fascination with the idea of
participating in a jojoba farming venture and their
satisfaction with tax benefits of expensing their
investments, which were clear to them from the
promoter’s presentation. They passed the offering
circular by their accountants for a "glance" * * *.
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