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893 (6th Cir. 1993), affg. Donahue v. Commissioner, T.C. Memo.
1991-181; Laverne v. Commissioner, 94 T.C. 637, 652-653 (1990),
affd. without published opinion 956 F.2d 274 (9th Cir. 1992);
Sann v. Commissioner, supra. Pleas of reliance have been
rejected when neither the taxpayer nor the advisers purportedly
relied upon by the taxpayer knew anything about the nontax
business aspects of the contemplated venture. See David v.
Commissioner, supra; Freytag v. Commissioner, supra.
In these cases, the purported value of the recyclers
generated the deductions and credits. This circumstance was
clearly reflected in the offering memorandum. Prior to
purchasing partnership interests in Hamilton, Thornsjo and
Furlong did not read the offering memorandum and Woolf only
briefly reviewed it. However, Schluter read the offering
memorandum and was fully aware of the tax benefits associated
with a so-called investment in Hamilton. In their discussions
with Schluter, petitioners surely learned or should have learned
about the amount and nature of the tax benefits. Plainly the tax
benefits associated with purchasing a partnership share in
Hamilton, including the carrybacks, were very substantial. The
direct reductions claimed on petitioners’ tax returns, from the
investment tax credit alone, exceeded their cash investment.
Therefore, like the taxpayers in Provizer v. Commissioner, T.C.
Memo. 1992-177, “except for a few weeks at the beginning,
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