- 12 -
there is no indication that petitioners ever were aware of the
nature of the purportedly uncertain legal issues involved.
Petitioners may not rely upon a “lack of warning” as a defense to
negligence where no reasonable investigation was ever made, and
where they were repeatedly warned of the relevant risks in the
private placement memorandum. Christensen v. Commissioner, T.C.
Memo. 2001-185; Robnett v. Commissioner, T.C. Memo. 2001-17.
Finally, petitioners argue that they were not negligent
because they relied on advice contained in the legal opinion
referenced in the private placement memorandum.5 Reasonable
reliance on professional advice may be a defense to the
negligence additions to tax. United States v. Boyle, 469 U.S.
241, 250-251 (1985); Freytag v. Commissioner, 89 T.C. 849, 888
(1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. on another
issue 501 U.S. 868 (1991). The advice must be from competent and
independent parties, not from the promoters of the investment.
LaVerne v. Commissioner, 94 T.C. 637, 652 (1990), affd. without
published opinion sub nom. Cowles v. Commissioner, 949 F.2d 401
(10th Cir. 1991), affd. without published opinion 956 F.2d 274
(9th Cir. 1992); Rybak v. Commissioner, 91 T.C. 524, 565 (1988).
According to the private placement memorandum’s summary of
the letter upon which petitioners claim reliance, the letter
5No copy of the opinion letter appears in the record, and
petitioners have not established that they ever received such a
letter.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011