Malcolm I. Lewin and Trina Lewin - Page 26

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          should have questioned whether the prices were in fact negotiated           
          at arm’s length.  Under these circumstances, petitioners’ claim             
          that they reasonably and in good faith relied on the tax opinion            
          is unconvincing.  A sophisticated, experienced, and intelligent             
          lawyer like petitioner would know, or at least should know,                 
          better than to rely blindly upon a document with the warnings and           
          defects of the memorandum.                                                  
               Petitioners’ contention that they reasonably relied on the             
          expert opinions of Ulanoff and Burstein is unjustified.  Neither            
          Ulanoff nor Burstein was an expert in plastics or plastics                  
          recycling, and both relied on information provided by PI and                
          other parties related to the transaction in providing their                 
          reports.  In addition, Ulanoff and Burstein each owned an                   
          interest in at least one partnership that owned recyclers as part           
          of the Plastics Recycling program.  See, e.g., Jaroff v.                    
          Commissioner, T.C. Memo. 1996-527.  Petitioners did not                     
          independently obtain these individuals’ advice but rather                   
          received their reports as part of the promotional material                  
          received from SAB Foam.  Reliance on the memorandum, and the                
          reports therein, is simply an inadequate defense for petitioners.           
          Given the well-disclosed fact that the investment and energy tax            
          credits generated by SAB Foam depended on the fair market value             
          of the recyclers, petitioner should have made inquiries about the           
          value of the recyclers rather than merely relying on the                    

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