- 37 -
Hoyt’s conduct does not alter our conclusion that petitioners
were negligent with respect to entering the Hoyt investment, and
that they were negligent with respect to the position that they
took on their 1991 tax return. Despite Mr. Hoyt’s actions, the
positions taken on the 1991 return signed by petitioners were
ultimately the positions of petitioners, not of Mr. Hoyt.
V. Conclusion
Upon the basis of the record before the Court, we conclude
that petitioners’ actions in relation to the Hoyt investment
constituted a lack of due care and a failure to do what
reasonable or ordinarily prudent persons would do under the
circumstances. First, petitioners entered into an investment, in
which they gave Mr. Hoyt authority to incur personal debts on
their behalf and control petitioners’ interest in their
partnership, without investigating the legitimacy of the
partnerships beyond the advice of Mr. Van Scoten’s father.
Second, and foremost, petitioners trusted individuals who told
them that they effectively could escape paying Federal income
taxes for a number of years--petitioners reported a combined tax
liability of $2,640 on $106,046 of wage, interest, and pension
income over 2 years, and reported zero tax liability on $129,582
of AGI for the prior 3 years--based solely upon the tax advice of
the individuals promoting the tax shelter. Our conclusion is
reinforced by the fact that petitioners received warnings from
respondent, warnings that petitioners chose to ignore. We find
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011