Kenneth and Dorothy Hitchen - Page 22

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          losses purportedly reduced petitioners’ tax liability to a                  
          combined total of $103 for 1988 and 1989.                                   
               In summary, the tax returns and the Form 1045 filed by                 
          petitioners during the years in issue resulted in a claimed total           
          tax liability of $1,191.  Mr. Hitchen earned wages during those             
          years totaling $250,753.  Petitioners admit that they did not               
          know the reasoning behind the tax benefits touted by the Hoyt               
          organization that led to this nearly complete elimination of                
          Federal tax liability.  Yet petitioners did nothing to inquire              
          into the legitimacy of the tax claims other than to assume the              
          returns prepared by the Hoyt organization were correct.                     
          Furthermore, most of the “too good to be true” tax benefits were            
          claimed by petitioners within months of receiving the warning               
          letter from respondent, and immediately after the Hoyt                      
          organization switched petitioners to a new partnership and                  
          advised petitioners to begin reporting losses as having been                
          derived from farming activities rather than from partnerships--             
          efforts that were apparently designed to avoid detection by the             
          IRS.  Petitioners chose to follow Mr. Hoyt’s advice, however, and           
          they ignored any communications from the IRS.                               
               While we are mindful of the fact that petitioners were                 
          unsophisticated in both investment and tax matters, we conclude             
          that petitioners’ actions in relation to the Hoyt investment                
          constituted a lack of due care and a failure to do what                     

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