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exercise due care in claiming large deductions and tax credits
with respect to SAB Foam on his Federal income tax return. In
view of petitioner’s sophistication, experience, and education,
it was not reasonable for petitioner to rely as he did on an
interconnected group of advisers, promoters, and insiders, none
of whom had any expertise in plastics recycling. Petitioner
should have been able to determine that the recyclers were not
unique, that they were not worth the amount ascribed to them, and
that SAB Foam lacked economic substance and had no potential for
profit. None of the so-called advisers undertook a good faith
investigation of the fair market value of the recyclers or of the
underlying economic viability or financial structure of SAB Foam.
Further, most of petitioner’s professional advisers had a
financial interest in either SAB Foam or another similar
partnership. The Plastics Recycling transaction was a sham, and,
as a sophisticated attorney, petitioner should have been able to
figure this out if he really had tried. Upon consideration of
the entire record, respondent’s determinations that petitioner is
subject to negligence penalties under section 6653(a)(1) and (2),
with respect to his tax return for 1982, are sustained.
Issue 2. Piggyback Agreement
Petitioner argues that he is entitled to the benefits of the
Stipulation of Settlement for Tax Shelter Adjustments (piggyback
agreement) applicable to Plastics Recycling cases. Petitioner
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