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States Tax Court, adopting the opinion of Special Trial Judge
Dinan. Second, and more importantly, petitioner admits that he
did not read the entire case, nor did he understand it. Instead,
he relied on the interpretation provided by Hoyt. We have
already found that petitioner’s reliance on Hoyt and his
organization was unreasonable. Likewise, accepting Hoyt’s
assurances that Bales was a wholesale affirmation of the
legitimacy of his organization was also unreasonable.
Petitioner also argues that, because this Court was unable
to uncover the fraud or deception by Hoyt in Bales, petitioner,
as an individual taxpayer, an “unsophisticated investor”, and a
person of “modest income”, was in no position to evaluate the
legitimacy of his investment or the tax benefits claimed with
respect thereto. As previously noted by this Court:
This argument employs the Bales case as a red herring:
The Bales case 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 challenge by the
Commissioner, no matter how illegitimate the
partnerships had become or how unreasonable the
taxpayers were in making investments therein and
claiming the tax benefits that Mr. Hoyt promised would
ensue.
Hansen v. Commissioner, T.C. Memo. 2004-269; see also Mortensen
v. Commissioner, 440 F.3d at 390-391; Van Scoten v. Commissioner,
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