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competence to give such advice and the clear presence of a
conflict of interest. See Rybak v. Commissioner, 91 T.C. 524,
565 (1988). Petitioners' reliance on the advice of Mr. Sheets
was unreasonable under the circumstances.
Outside of Mr. Mathis and Mr. Sheets, petitioner's sole
inquiry into the viability of this partnership's operations was
his contact with a jeweler, Mr. Huntington, who advised
petitioner that there were concerns in the watch industry about
the lack of availability of sperm whale oil as a lubricant and
the prospects for any viable substitute for this oil. The Court
finds it notable that the offering listed at least fifteen
"potential uses of jojoba nuts", only one of which was a
lubricant substitute for sperm whale oil; yet, petitioners chose
to explore only one of those potential uses by contacting a local
jeweler. Some other potential uses listed in the offering were
cosmetics, shampoos and soaps, sunscreens, pharmaceuticals,
cooking oils, disinfectants, polishing waxes, corrosion
inhibitors, candles, animal feed supplements, and fertilizer.
Being a physician, it seems logical that petitioner would have
had some access to information about the use of jojoba in the
pharmaceutical arena; however, petitioner failed to pursue this
possibility. Petitioners' failure to investigate any of the
other enumerated potential uses of jojoba plants was unreasonable
under the circumstances.
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