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Commissioner, T.C. Memo. 2001-183; Carmena v. Commissioner, T.C.
Memo. 2001-177; Nilsen v. Commissioner, T.C. Memo. 2001-163;
Fawson v. Commissioner, T.C. Memo. 2000-195. Petitioner, an
experienced attorney, should have understood the legal
ramifications of the license agreement canceling the R&D
contract.
Second, we are unable to accept uncritically petitioner’s
contention that he invested in San Nicholas solely to earn a
profit.17 Rather, at the time that he signed the subscription
agreement, petitioner believed that his investment in San
Nicholas offered tax benefits, and his decision to invest was
influenced by that belief.
Third, we do not think that petitioner, a well-educated and
successful attorney and a sophisticated investor, exercised due
care at the time that he signed the subscription agreement. In
this regard we are again unable to accept uncritically
petitioner’s contention that he reasonably relied on the offering
memorandum. The short answer to this contention is that
17 It is the duty of the Court to listen to testimony,
observe the demeanor of witnesses, weigh the evidence, and
determine what to believe. The Court is not required to accept
testimony at face value, and the Court may discount a party’s
self-interested testimony and place reliance on other evidence
that is believed to be more reliable. See Christensen v.
Commissioner, 786 F.2d 1382, 1383-1384 (9th Cir. 1986), affg. in
part and remanding in part T.C. Memo. 1984-197; Niedringhaus v.
Commissioner, 99 T.C. 202, 212 (1992); Duralia v. Commissioner,
T.C. Memo. 1994-269; see also Tokarski v. Commissioner, 87 T.C.
74, 77 (1986).
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