Jeffrey H. Weitzman - Page 19




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          partnership investment to petitioner should have put petitioner             
          on guard that Freedman was engaged in selling rather than acting            
          as an independent adviser.  “It is unreasonable for taxpayers to            
          rely on the advice of someone who they know has a conflict of               
          interest.”  Addington v. Commissioner, 205 F.3d at 59; see also             
          Goldman v. Commissioner, 39 F.3d at 408; LaVerne v.                         
          Commissioner, 94 T.C. at 652.                                               
               Likewise, Jacobson’s affiliation with Freedman should have             
          made petitioner wary of his recommendation.  Jacobson was                   
          employed by Freedman’s accounting firm, H.W. Freedman & Co.                 
          H.W. Freedman & Co. prepared the tax returns for ECI, F&G, and              
          partnerships engaged in plastics recycling transactions.  See               
          Provizer v. Commissioner, supra.  Freedman was also named in the            
          offering memorandum as president of F&G, lessors of the                     
          recyclers.  Petitioner acknowledged at trial that Jacobson “was             
          more heavily involved in the investment than [petitioner]                   
          realized”.  Petitioner should have examined Jacobson’s motives              
          for recommending the investment.  As a real estate attorney,                
          petitioner should have known to exercise caution in relying upon            
          his advice.                                                                 
               Petitioner’s testimony suggests that in investing in the               
          partnership he never had a profit motive beyond anticipated tax             
          savings.  When asked at trial whether he expected that he would             
          receive a positive cashflow from his investment in the                      






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