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v. Commissioner, 118 F.3d 184, 188 (4th Cir. 1997), affg. T.C.
Memo. 1996-167; Freytag v. Commissioner, supra at 888.
The Court's review of the evidence in this case leads to the
conclusion that petitioners did not place reasonable reliance, in
good faith, on a competent professional adviser in making their
investment in the Arid Land partnership.
According to petitioner's testimony, after a perfunctory
discussion with what he thought was an insurance agent, the agent
recommended that he invest in a jojoba research and
experimentation limited partnership. Petitioner implied that the
switch in investment focus from life insurance to jojoba research
was not remarkable to him, even though this was his first
involvement with Desmond.
Petitioners did not receive, and apparently did not request,
a private placement letter, prospectus, or any other document
describing their investment. Petitioner testified that Desmond
provided a copy of a bill passed by Congress encouraging jojoba
cultivation and some newspaper articles on the subject that
convinced him of the validity of the investment. Petitioner
presented as exhibits items similar to those described in his
testimony, but they all postdate his investment in Arid Land.
Petitioner also seemed relatively unconcerned by being
solicited to invest in an entity called "New Jersey Agri 83-1"
and being placed in one called Arid Land Research Partners.
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