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the year in issue. However, this does not alter our conclusion
that petitioner was negligent with respect to entering the Hoyt
investment, and that he was negligent with respect to the
positions that he took on his 1991 tax return. Despite Mr.
Hoyt’s actions, the positions taken on the 1991 return signed by
petitioner were ultimately the positions of petitioner, not of
Mr. Hoyt.
V. Conclusion
On the basis of the record before the Court, we conclude
that petitioner’s actions in relation to the Hoyt investment
constituted a lack of due care and a failure to do what a
reasonable or ordinarily prudent person would do under the
circumstances. First, petitioner entered into an investment--in
which he gave Mr. Hoyt the authority to incur personal debts on
his behalf and control his interest in his partnerships--without
adequately investigating the legitimacy of the partnerships.
Second, and foremost, petitioner trusted individuals who told him
that he effectively could escape paying Federal income taxes for
a number of years--petitioner reported a combined tax liability
of $4,349 on $290,149 of income over 6 years starting with 1986,
and reported zero tax liability on $116,170 of AGI for the prior
3 years--based solely upon the tax advice of the individuals
receiving some of the benefits of the tax savings. Our
conclusion is reinforced by the fact that petitioner received
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