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issue should be respected for Federal income tax purposes.”
Bales involved different investors, different partnerships,
different taxable years, and different issues than those
underlying the present case.
First, petitioner argues that he relied on the Bales opinion
in claiming the deduction for the partnership loss. Without
further addressing the applicability of Bales to petitioner’s
situation, we find that petitioner has not established that he
relied on Bales in this manner. While petitioner received the
opinion and may have read a portion of it, there is no evidence
that he, without any background in law or accounting, personally
relied upon the opinion in claiming the relevant partnership
loss. Rather, petitioner admits that he relied instead on the
interpretation of Bales provided by Mr. Hoyt and members of his
organization, who repeatedly claimed that Bales was proof that
the partnerships and the tax positions were legitimate. We have
already found that petitioner’s reliance on Mr. Hoyt and his
organization was objectively unreasonable and, as such, not a
defense to the negligence penalty. Accepting Mr. Hoyt’s
assurances that Bales was a wholesale affirmation of his
partnerships and his tax claims was no less unreasonable.
Second, petitioner argues that, because this Court was
unable to uncover the fraud or deception by Mr. Hoyt in Bales,
petitioner as an individual taxpayer was in no position to
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