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Despite the inapplicability of the judicial estoppel
doctrine in this case, we note that respondent’s position herein
is in no manner contradictory to the position taken by the United
States in the criminal conviction of Mr. Hoyt. See, e.g.,
Goldman v. Commissioner, 39 F.3d at 408 (taxpayer-appellants’
argument that an investment partnership “constituted a fraud on
the IRS, as found by a civil jury * * * and by the tax court * *
* cannot justify appellants’ own failure to exercise reasonable
care in claiming the losses derived from their investment”). To
the contrary, this Court has sustained a finding of negligence
with respect to investors who had been victims of deception by
tax shelter promoters. For example, in Klieger v. Commissioner,
T.C. Memo. 1992-734, this Court held that taxpayers in a
situation similar to that of petitioners were negligent. In
Klieger, we addressed taxpayers’ involvement in certain
investments that were sham transactions that lacked economic
substance:
Petitioners are taxpayers of modest means who were
euchred by Graham, a typical shifty promoter. Graham sold
petitioners worthless investments by giving spurious tax
advice that induced them to reduce their withholding and
turn their excess pay over to Graham as initial payments to
acquire interests in “investment programs” that did not
produce any economic return and apparently never had any
prospects of doing so. Graham purported to fulfill his
prophecies about the tax treatment of the Programs by
preparing petitioners’ tax returns and claiming deductions
and credits that have been disallowed in full, with
resulting deficiencies * * *.
* * * * * * *
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