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with financial decisions in their business careers. Moreover,
petitioners were fully warned by Schluter that the valuation of
the recyclers concerned him. Nevertheless, petitioners
disregarded these warnings and failed to consult any independent
advisers with expertise in plastics or plastics recycling.
Petitioners also failed to conduct a reasonable independent
investigation into the market value of the recyclers or any of
the other economics of the Hamilton transaction.
Petitioners’ reliance on Krause v. Commissioner, 99 T.C. 132
(1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d 1024
(10th Cir. 1994), is misplaced. The facts in the Krause case are
distinguishable from the facts in these cases. In Krause, the
taxpayers invested in limited partnerships whose investment
objectives concerned enhanced oil recovery (EOR) technology.
Krause states that during the late 1970’s and early 1980’s, the
Federal Government adopted specific programs to aid research and
development of EOR technology. See id. at 135-136. In holding
that the taxpayers in Krause were not liable for the negligence
addition to tax, this Court noted that one of the Government’s
expert witnesses acknowledged that “investors may have been
significantly and reasonably influenced by the energy price
hysteria that existed in the late 1970s and early 1980s to invest
in EOR technology.” Id. at 177. While EOR was, according to our
opinion in Krause, at the forefront of national policy and the
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