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conflict of interest in advice given to investors). However, the
court stressed that the investment adviser--an independent
insurance agent and registered securities dealer--was a good
friend of the taxpayer and was not affiliated with the investment
the taxpayers entered into. Anderson v. Commissioner, supra at
1271.
The present case is distinguishable from Anderson in two
important respects. First, in the case at hand, Mr. Trimboli was
involved with principals of the investment prior to the creation
of the partnership. In particular, he was in contact with Mr.
Cole, who was to become the general partner of Arid Land, and
with Mr. Pace, who was to become the president of the research
and development contractor. Although petitioners argue that Mr.
Trimboli was an outsider who coincidentally prepared the
partnership’s return, we find that Mr. Trimboli’s relationship
with the partnership and its principals makes him more than a
disinterested commission-based salesman, as was the case in
Anderson. In light of his relationship to Arid Land, Mr.
Trimboli cannot be considered to be an independent adviser.
Second, the investment adviser in Anderson was a good friend
of the taxpayer. Petitioners’ relationship with Mr. Trimboli was
purely professional and is not analogous to the close friendship
between taxpayer and adviser in Anderson. See also Dyckman v.
Commissioner, T.C. Memo. 1999-79 (taxpayers reasonably relied on
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