- 33 -
assumed that the simultaneous sales of the recyclers were
meaningful economic transactions that would be respected for tax
purposes. Petitioner made no effort to evaluate the tax aspects
of the Madison transactions beyond reviewing the Boylan & Evans
tax opinions, and he did not obtain an evaluation of the Madison
investment from an independent and competent tax professional.
Finally, petitioner failed to prove that his reliance on his
bus rental activity, another investment that was reaping large
tax benefits for petitioner, to validate his Madison investment
was reasonable. Petitioner did not introduce any evidence to
establish that there was any legitimate economic or legal reason
for comparing the two investments, that he had adequately and
reasonably investigated the bus rental activity before investing
in it, or that the bus investment had itself withstood scrutiny
by respondent.
Although petitioner is a highly educated man with
substantial experience in chemical engineering, petitioner did
not exercise the kind of due diligence that a reasonable and
prudent person with his education and experience should have
exercised under the circumstances. He did not visit or inspect
the recyclers, he did not observe and evaluate the recycling
process, he did not obtain a professional appraisal of the value
of the recyclers even though he had doubts about their value,
and he did not obtain an independent evaluation of the tax
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011