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Finally, the investor subscription agreement accompanying
the private placement memorandum required a subscriber upon
purchase of an interest to aver that:
He understands that an investment in the Partnership is
speculative and involves a high degree of risk, there is no
assurance as to the tax treatment of items of Partnership
income, gain, loss, deductions of credit and it may not be
possible for him to liquidate his investment in the
Partnership.
Mr. Trimboli received commissions for selling interests in
the partnership, similar to the commissions he received for
selling other types of investments. Petitioners were aware that
Mr. Trimboli received these commissions, and in fact petitioners
never paid Mr. Trimboli a separate fee for his financial planning
services. In addition to the commissions, Mr. Trimboli was
retained by Arid Land to prepare the 1983 tax return for the
partnership. In preparing the partnership’s return, Mr. Trimboli
relied on financial information provided by Mr. Cole and on the
opinion letter given to Mr. Cole by outside counsel. The 1983
Schedule K-1, Partner’s Share of Income, Credits, Deductions,
etc., sent to petitioners as partners in Arid Land reflected
their share of the losses claimed by the partnership on the
return prepared by Mr. Trimboli. Mr. Trimboli’s partner, Mr.
Cannito, subsequently prepared petitioners’ joint Federal income
tax return for the taxable year 1983, claiming a deduction for a
loss arising from the Arid Land investment in the amount of
$34,739, pursuant to the Schedule K-1 received by petitioners.
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