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did not know any details concerning the opinion, and, when
questioned about a letter from the Hoyt organization regarding
another case in this Court, he further testified that he “didn’t
care about” the portions of the letter pertaining to the “Tax
Court writing stuff”. In short, the record shows that if
petitioners relied on Bales to any degree, they relied only 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 petitioners’ 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, petitioners argue that, because this Court was
unable to uncover the fraud or deception by Mr. Hoyt in Bales,
petitioners as individual taxpayers were in no position to
evaluate the legitimacy of their partnership or the tax benefits
claimed with respect thereto. This argument employs the Bales
case as a red herring: Bales involved different investors,
different partnerships, different taxable years, and different
issues. Furthermore, adopting petitioners’ position would imply
that taxpayers should have been given carte blanche to invest in
partnerships promoted by Mr. Hoyt, merely because Mr. Hoyt had
previously engaged in activities which withstood one type of
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