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Mr. Greer showed the offering memorandum to his tax return
preparer and tax adviser to confirm the tax computations Madison
represented would result from his investment prior to purchasing a
limited partnership unit. The tax adviser and return preparer Mr.
Greer contacted was John Artis, a certified public accountant with
the accounting firm of Smith, Goolsby, Artis, & Reams in Ashland,
Kentucky (the accounting firm). The accounting firm had prepared
petitioners’ income tax returns for approximately 10 years before
1982. Mr. Artis did not read the entire offering memorandum, but
based upon his conversations with Mr. Greer, he understood that
the tax benefits associated with the Madison interest exceeded the
dollars invested. Because of this understanding, Mr. Artis told
Mr. Greer that Madison was “fairly aggressive” from a tax
standpoint. Mr. Artis was not asked by Mr. Greer to provide a
written tax opinion about the merits of the tax treatment
represented in the Madison offering memorandum; rather, Mr. Greer
asked him to confirm the amount of the tax benefits petitioners
would claim on their tax return for 1982, if Mr. Greer purchased
the limited partnership interest. Mr. Artis told Mr. Greer the
result on the 1982 return he computed would be in accord with the
benefits Mr. Greer expected.
Petitioners’ capital contribution was limited to their
$50,000 investment in Madison because Mr. Greer purchased a 5.5-
percent limited partnership unit in Madison that was not subject
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