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The unidentified C.P.A. and Mejia did not testify at trial.
Moreover, petitioners failed to introduce any evidence that
indicates that this C.P.A. or Mejia had any expertise in plastics
or plastics recycling. Schluter’s assertions that he and the
unidentified C.P.A. concluded that the recyclers’ valuation was
reasonable based upon the value of computers in 1982 is
unconvincing. At trial, Schluter did not explain how the cost of
computers in 1982 related to the valuation of plastic recyclers.
Moreover, Mejia acted as a broker on the transactions. See West
v. Commissioner, T.C. Memo. 2000-389, concerning Mejia activities
in marketing plastic recycling tax shelter partnerships. As we
have already stated, reliance on representations by promoters is
not an adequate defense to negligence. See Pasternak v.
Commissioner, supra; Laverne v. Commissioner, supra; Sann v.
Commissioner, T.C. Memo. 1997-259.
Moreover, Schluter’s reliance upon the offering materials,
which included a marketing report prepared by Ulanoff and a
technical opinion prepared by Burstein, to determine the
recyclers’ value was not reasonable. Schluter never investigated
whether Ulanoff or Burstein had an interest in Plastics Recycling
transactions. In fact, Ulanoff and Burstein each invested in
several Plastics Recycling partnerships. The offering memorandum
also disclosed that Burstein was a client and business associate
of PI’s corporate counsel.
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