                        T.C. Memo. 2008-290



                      UNITED STATES TAX COURT



            DAVID AND BEVERLY ALTMAN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16356-06.              Filed December 22, 2008.



          R determined that Ps are liable for additions to
     tax pursuant to secs. 6653(a)(1) and (2) and 6661(a),
     I.R.C., for their 1982 tax year.

          Held:   Ps are liable for the additions to tax.



     John Gigounas, for petitioners.

     David Rakonitz, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:   This case is before the Court on a petition

for redetermination of an affected items notice of deficiency in
                                    - 2 -

which respondent determined that petitioners are liable for the

following additions to tax:1

                                     Additions to Tax
     Year         Sec. 6653(a)(1)     Sec. 6653(a)(2)    Sec. 6661(a)

     1982           $315.50            $32,280.26         $1,577.50

         Unless otherwise indicated, section references are to the

Internal Revenue Code, as amended and in effect for the taxable

year at issue.     In their brief, petitioners concede that they are

liable for the section 6661(a) addition to tax.         The remaining

issues for decision are whether petitioners are liable for the

additions to tax under section 6653(a)(1) and (2).

                              FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and the accompanying exhibits are hereby incorporated by

reference into our findings.       At the time they filed their

petition, petitioners resided in California.



     1
      The draftsmanship of the notice of deficiency leaves much
to be desired. The first page of the notice of deficiency
incorrectly reflects the combined amount of the additions to tax
under sec. 6653(a)(1) and (2)--$32,595.76--as an addition to tax
under sec. 6653(a)(1). The explanation attached to the notice of
deficiency mistakenly refers to those additions to tax as having
been determined under sec. 6653(a)(1)(A) and (B), which succeeded
sec. 6653(a)(1) and (2). The first page of the notice of
deficiency also erroneously references sec. 6662(d), which
succeeded sec. 6661 and which applies to returns whose due date
(determined without regard to extensions) is after Dec. 31, 1989.
See Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239,
sec. 7721(a), (c)(2), (d), 103 Stat. 2395-2400. However, the
explanation attached to the notice of deficiency correctly refers
to sec. 6661.
                               - 3 -

     Petitioner Dr. David Altman had a long and distinguished

career.   He received a Ph.D. in physical chemistry from the

University of California at Berkeley in 1943, where Dr. J. Robert

Oppenheimer was one of his thesis advisers.2   Dr. Oppenheimer

offered Dr. Altman a position as an associate chemist working for

the Manhattan Project, which Dr. Altman accepted.   Dr. Altman

served in that position until the end of World War II.   His work

for the Manhattan project was interrupted by a 4-month leave of

absence from late 1943 to early 1944 during which he worked on a

special project for the U.S. Navy to determine whether the

lubricant qualities of various detergents could act to calm waves

and decrease the intensity of breakers during amphibious

landings.

     After World War II, Dr. Altman worked for 11 years for the

Jet Propulsion Laboratory at the California Institute of

Technology where he investigated a variety of chemicals, fuels,

and oxidizers for use in rocket motors.   Following a 3-year stint

as head of the propulsion department at Aeronutronic Systems,

Inc., a defense and aerospace subsidiary of the Ford Motor Co.,

he went to United Technologies Corp.   There, he eventually became

vice president of the Research and Engineering Departments at the

Chemical Systems Division, before retiring in June 1981.


     2
      Dr. Altman’s thesis concerned surface tension and the
detergent qualities of chemicals. He studied compounds such as
oleic acid, palmitic acid, and sperm whale oil.
                                   - 4 -

        On December 29, 1982, petitioners invested in CAL-NEVA

Partners (CAL-NEVA), a Nevada limited partnership involved in the

growing of jojoba beans.       In exchange for a 6.67-percent interest

(5 units) in CAL-NEVA, they paid $5,000 in cash and signed a

promissory note for $9,250.3      Dr. Altman had invested in stocks

and other partnerships before investing in CAL-NEVA, and he did

not consider petitioners’ investment in CAL-NEVA to be highly

significant.

     Sometime before petitioners invested in CAL-NEVA, Dr. Altman

had received a promotional phone call from Yolanda J. Benham

regarding an investment in CAL-NEVA.       Ms. Benham was CAL-NEVA’s

general partner (and eventually its tax matters partner), and Dr.

Altman had not had any dealings with Ms. Benham before that phone

call.       Before petitioners invested in CAL-NEVA Dr. Altman also

spoke with Eugene Pace, “who was the president of what was to

become the purported research and development contractor to * * *

[CAL-NEVA], U.S. Agri Research & Development Corp.”       Bronson v.

Commissioner, T.C. Memo. 2002-260.

        In addition to Dr. Altman’s conversations with Ms. Benham

and Mr. Pace, petitioners were provided copies of a “Private




        3
      Although the note provided for a 16-year repayment term (6
years of semi-annual payments of interest only followed by 10
years of quarterly payments of principal and interest),
petitioners only made payments on that note until 1988 or 1989.
                               - 5 -

Placement Memorandum”4 before they invested in CAL-NEVA.5   The

private placement memorandum informed its readers that an

investment in CAL-NEVA was available only to investors who had,

among other things, “a minimum net worth (exclusive of homes,

furnishings, and automobiles) of at least $200,000, or, a net

worth of at least $100,000, and an annual income subject to

taxation at a marginal rate of not less than 50%”.   In a section

entitled “RISK FACTORS”, the private placement memorandum warned

of many risks and cautioned that “Investors must be prepared for

the possible loss of their entire investment.”

     A significant portion of the private placement memorandum

was dedicated to Federal tax issues.   In a section discussing

whether CAL-NEVA would be categorized as a partnership or a

corporation, the private placement memorandum cautioned that

“most of the tax shelter benefits would be lost to the Limited

Partners” in the event that CAL-NEVA was “treated for federal

income tax purposes as an association taxable as a corporation

rather than a partnership”.   In a section discussing the

“Deductibility of Research or Experimental Expenditures”, the



     4
      Attached to that Private Placement Memorandum were a number
of exhibits, including a form of “Research and Development
Agreement” and a form of “License Agreement”.
     5
      That private placement memorandum was amended on Dec. 20,
1982. The minimum capitalization requirement was “reduced to
$213,750 (75 units at $2,850 per unit) from $541,500 (190 units
at $2,850 per unit).”
                               - 6 -

private placement memorandum warned “that there is little

published authority dealing with the specific types of

expenditures which will qualify as research or experimental

expenditures within the meaning of Section 174” and that “There

are various theories under which such deductions might be

disallowed or required to be deferred.”   After addressing various

theories on which the Internal Revenue Service might challenge

deductions under section 174, the private placement memorandum

stated that “No ruling by the Service has been or will be sought

regarding deductibility of the proposed expenditures under

Section 174 of the Code.”6   At least three times in the private

placement memorandum, prospective investors were told to consult

their own tax advisers regarding the tax implications of an

investment in CAL-NEVA.

     Dr. Altman also did his own research into the jojoba plant;

he understood jojoba oil to be a substitute for sperm whale oil.7



     6
      Immediately following that sentence is a citation to an
“Opinion of Counsel to the General Partners”. That opinion,
which was over 15 pages long, was signed by Barnet Resnick on
behalf of the law firm of Caplan & Resnick. According to Dr.
Altman, the actual opinion was not provided to petitioners along
with the memorandum. However, the opinion was summarized under a
heading of the memorandum entitled “TAX ASPECTS”.
     7
      “Jojoba oil is actually a liquid wax ester, unlike the
triglyceride oils typically produced by plants, and is similar to
sperm whale oil.” Utah Jojoba I Research v. Commissioner, T.C.
Memo. 1998-6. A 1971 ban on the importation of sperm whale oil
sparked an interest in domestic production of jojoba oil. See
id.
                               - 7 -

In addition, he did his own discounted cashflow analysis before

petitioners invested in CAL-NEVA.   His analysis was based on

projected cashflows taken from the private placement memorandum.

Those projected cashflows were preceded by a warning in all-caps

font that they:   (1) Had been prepared for the general partner

and had not been audited; (2) were subject to a number of

contingencies and assumptions which might or might not have

occurred or been proven realistic; and (3) were not to be relied

upon to indicate the actual results to be obtained.

     In 1982 CAL-NEVA filed with the Internal Revenue Service and

provided to petitioners a Schedule K-1, Partner’s Share of

Income, Credits, Deductions, etc., in which CAL-NEVA allocated to

petitioners an ordinary loss of $12,932.   In turn, petitioners on

their 1982 joint Form 1040, U.S. Individual Income Tax Return,

claimed an ordinary loss relating to their interest in CAL-NEVA

of $12,932 as a deduction in computing their total income.    Earl

A. Mohler, a professional tax preparer, prepared that return.8

     On February 11, 1987, respondent sent petitioners a notice

of final partnership administrative adjustment (FPAA) issued to

CAL-NEVA for its 1982 tax year.   In the FPAA respondent

disallowed research and development expenses of $193,150 and

organizational costs of $42.   See Bass v. Commissioner, T.C.


     8
      On Apr. 15, 1986, petitioners filed a Form 1040X, Amended
U.S. Individual Income Tax Return, for their 1982 tax year. The
amount of reported deductions remained unchanged.
                                 - 8 -

Memo. 2007-361.    On March 16, 1987, a petition in the name of

CAL-NEVA Partners, Yolanda J. Benham, Tax Matters Partner, was

filed with the Court at docket No. 6594-87.    On October 18, 1993,

the parties filed a stipulation to be bound by the result in Utah

Jojoba I Research v. Commissioner (Utah Jojoba I), a case

docketed at No. 7619-90.

        The Court issued an opinion in Utah Jojoba I on January 5,

1998, in which it held that the partnership at issue in that case

was not entitled to deduct its losses for research and

development expenditures.     See Utah Jojoba I Research v.

Commissioner, T.C. Memo. 1998-6.    A decision in Utah Jojoba I was

entered on January 8, 1998.    At that time, Ms. Benham could not

be found.    Respondent eventually filed a motion for entry of

decision and a motion to appoint a tax matters partner for CAL-

NEVA.   On February 1, 2005, the Court ordered CAL-NEVA’s partners

to show cause why respondent’s motion for entry of decision

should not be granted.    No response to that order was received.

See Bass v. Commissioner, supra.     On April 11, 2005, the Court

granted respondent’s motion for entry of decision and entered a

decision against CAL-NEVA upholding as correct the partnership

item adjustments as determined and set forth in the FPAA for CAL-

NEVA’s 1982 tax year.    That decision was not appealed and became

final on July 11, 2005.
                                - 9 -

       On July 6, 2006, respondent issued petitioners a notice of

deficiency for their 1982 tax year.      Petitioners then filed a

timely petition with this Court.    A trial was held on March 19,

2008, in San Francisco, California.

                               OPINION

I.     Burden of Production

       Section 7491(c), which is applicable to court proceedings

arising in connection with examinations commenced after July 22,

1998, shifts the burden of production to the Commissioner with

respect to a taxpayer’s liability for penalties and additions to

tax.    See Internal Revenue Service Restructuring and Reform Act

of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727.      The

parties disagree as to whether section 7491(c) applies.

Petitioners argue that “the negligence penalties were not

partnership items but items to be determined at the partners’

level” and that “The examination of the negligence penalties

started when the July 6, 2006, Notice of Deficiency was sent to

Petitioners asserting the negligence penalties for the first

time.”    Respondent argues that the notice of deficiency “does not

represent when respondent began his initial examination of the

issue.”

       Although petitioners want us to decide this issue, because

the outcome of this case is unaffected by the application (or

lack thereof) of section 7491(c), we need not and do not decide
                               - 10 -

“whether the determination of additions to tax as affected items

resulting from a partnership examination is a separate

examination for purposes of the effective date of section 7491”.

Bass v. Commissioner, supra.     As we will explain, even assuming

that respondent has the burden of production, respondent has met

that burden under the facts and circumstances of this case.

II.   Additions to Tax Under Section 6653(a)(1) and (2)

      Section 6653(a)(1) and (2) imposes additions to tax if any

part of any underpayment of tax is due to negligence or disregard

of rules and regulations.9   For the purposes of this statute,

negligence is defined as a “‘lack of due care or failure to do

what a reasonable and ordinarily prudent person would do under

the circumstances.’”   Neely v. Commissioner, 85 T.C. 934, 947

(1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th

Cir. 1967), affg. in part and remanding in part 43 T.C. 168

(1964) and T.C. Memo. 1964-299).    “[T]he determination of

negligence is highly factual.”     Bass v. Commissioner, supra.

      The Court of Appeals for the Ninth Circuit, to which an

appeal would ordinarily lie in this case, has held that a



      9
      Those additions to tax are for: (1) An amount equal to 5
percent of the underpayment and (2) an amount equal to 50 percent
of the interest payable under sec. 6601 with respect to the
portion of the underpayment which is attributable to negligence.
Sec. 6653(a). That interest on which the penalty is computed is
the interest for the period beginning on the last date prescribed
by law for payment of the underpayment (without consideration of
any extension) and ending on the date of the assessment of the
tax. Id.
                             - 11 -

determination as to negligence for purposes of section 6653(a) in

a case involving a deduction for loss that results from an

investment “depends upon both the legitimacy of the underlying

investment, and due care in the claiming of the deduction.”

Sacks v. Commissioner, 82 F.3d 918, 920 (9th Cir. 1996), affg.

T.C. Memo. 1994-217.

     Petitioners contend that they were not negligent in

investing in CAL-NEVA because Dr. Altman had discussions with Ms.

Benham and Mr. Pace before petitioners made that investment.

They also contend that Dr. Altman’s research, investment

analysis, and expertise in research and development (R&D)

demonstrate their reasonableness in investing in CAL-NEVA.

Regarding the reasonableness of their 1982 tax deduction relating

to CAL-NEVA, they assert that they relied on Mr. Mohler.    They

rely heavily on Allison v. United States, 80 Fed. Cl. 568 (2008),

in which the U.S. Court of Federal Claims held that the taxpayers

in each of three cases had established reasonable reliance

defenses and were entitled to refunds of additions to tax imposed

on them under section 6653(a).

     Respondent argues that petitioners were not reasonable in

investing in CAL-NEVA or in claiming the deduction on their 1982

Federal income tax return for losses relating to that investment.

Regarding petitioners’ reasonableness in investing in CAL-NEVA,

respondent points out that Dr. Altman’s financial analysis was
                              - 12 -

based on projected cashflow projections in the private placement

memorandum which the memorandum itself noted had not been audited

and were based on assumptions that may or may not have been

proven realistic.   According to respondent, the drop in CAL-

NEVA’s minimum capitalization requirements on December 20, 1982,

“should have heightened petitioners’ concerns.”   Respondent

asserts that reliance on Mr. Pace was not reasonable, as he had a

financial interest in CAL-NEVA.   As for petitioners’ asserted

reliance on Mr. Mohler, respondent argues that petitioners have

not established that Mr. Mohler was provided with the private

placement memorandum or that he conducted any research into the

nature of that investment.

     As explained below, although reasonableness--including

reasonable reliance on professional advice--may serve as a

defense to the additions to tax for negligence, see United States

v. Boyle, 469 U.S. 241, 251 (1985), petitioners have not

demonstrated that they acted with due care with respect to their

investment in CAL-NEVA and subsequent deduction claimed in 1982

for a loss relating to that investment.

     CAL-NEVA’s underlying activity lacked legitimacy, as we held

in Utah Jojoba I.   See Utah Jojoba I Research v. Commissioner,

T.C. Memo. 1998-6 (“[W]e hold that Utah I was not actively

involved in a trade or business and also lacked a realistic

prospect of entering a trade or business.”).   Because CAL-NEVA
                             - 13 -

and the jojoba partnership at issue in Utah Jojoba I are

identical in all important respects, we need not rehash in detail

the license agreement and the R&D agreement entered into between

CAL-NEVA and U.S. Agri Research & Development Corp (the same

entity with which the partnership at issue in Utah Jojoba I

entered into a license agreement and an R&D agreement).    See Bass

v. Commissioner, T.C. Memo. 2007-361.   It is enough to note that

“the R & D agreement was designed and entered into solely to

provide a mechanism to disguise the capital contributions of the

limited partners as currently deductible expenditures and thus

reduce the cost of their participation in the farming venture.”

Utah Jojoba I Research v. Commissioner, supra.

     CAL-NEVA’s true purpose was not well concealed.   As the

Court has observed in a number of other cases involving nearly

identical jojoba partnerships:

          First, the principal flaw in the structure of
     Blythe II was evident from the face of the very
     documents included in the offering. A reading of the
     R & D agreement and licensing agreement, both of which
     were included as part of the offering, plainly shows
     that the licensing agreement canceled or rendered
     ineffective the R & D agreement because of the
     concurrent execution of the two documents. Thus, the
     partnership was never engaged, either directly or
     indirectly, in the conduct of any research or
     experimentation. Rather, the partnership was merely a
     passive investor seeking royalty returns pursuant to
     the licensing agreement. Any experienced attorney
     capable of reading and understanding the subject
     documents should have understood the legal
     ramifications of the licensing agreement canceling out
     the R & D agreement. However, petitioners never
     consulted an attorney in connection with this
                              - 14 -

     investment, nor does it appear that they carefully
     scrutinized the offering themselves.


Christensen v. Commissioner, T.C. Memo. 2001-185; Serfustini v.

Commissioner, T.C. Memo. 2001-183; Nilsen v. Commissioner, T.C.

Memo. 2001-163; see also Bass v. Commissioner, supra; Kellen v.

Commissioner, T.C. Memo. 2002-19.10

     Dr. Altman is a very sophisticated individual, and we

believe that he conducted his own research before petitioners

invested in CAL-NEVA.   In addition, petitioners have gone to

great lengths to distinguish this case from the many other cases

in which we have sustained negligence penalties stemming from

investments in jojoba partnerships.    While reasonableness

inquiries are highly factual and every case must be decided on

its particular merits, we have observed that “A guiding principle



     10
      We note that this case is distinguishable from Kantor v.
Commissioner, 998 F.2d 1514 (9th Cir. 1993), affg. in part and
revg. in part T.C. Memo. 1990-380. In Kantor the Court of
Appeals for the Ninth Circuit reversed this Court’s affirmance of
the imposition of a sec. 6653(a) addition to tax on the basis
that the experience and involvement of the general partner and
the lack of warning signs could reasonably have led investors to
believe that they were entitled to deductions in light of the
undeveloped state of the law regarding sec. 174. The Court of
Appeals explained that the Supreme Court’s decision in Snow v.
Commissioner, 416 U.S. 500 (1974), left unclear the extent to
which research must be “in connection with” a trade or business
for purposes of qualifying for an immediate deduction under sec.
174. See, e.g., Nilsen v. Commissioner, T.C. Memo. 2001-163.
Unlike the partnership in Kantor, CCJRP was neither engaged in a
trade or business nor conducting research and development, either
directly or indirectly. See Utah Jojoba I Research v.
Commissioner, T.C. Memo. 1998-6.
                                - 15 -

is that similarly situated taxpayers should be treated

similarly.”     Heller v. Commissioner, T.C. Memo. 2008-232 n.4.     As

we will explain below, petitioners’ reasonable reliance defense

does not differ materially from the reasonable reliance defenses

found to be unavailing in those cases.     See, e.g., Bass v.

Commissioner, supra; Kellen v. Commissioner, supra; Christensen

v. Commissioner, supra; Serfustini v. Commissioner, supra; Nilsen

v. Commissioner, supra.

     Petitioners have not demonstrated that they sought any

independent advice before they invested in CAL-NEVA, despite the

abundance of warnings in the private placement memorandum.      In

fact, Dr. Altman testified that he did not consult with anyone

other than Ms. Benham and Mr. Pace before petitioners invested in

CAL-NEVA.     Those individuals had obvious conflicts of interest

and reliance on them was not reasonable.    See Hansen v.

Commissioner, 471 F.3d 1021, 1031 (9th Cir. 2006) (“We have

previously held that a taxpayer cannot negate the negligence

penalty through reliance on a transaction’s promoters or on other

advisors who have a conflict of interest.”), affg. T.C. Memo.

2004-269; Masters v. Commissioner, T.C. Memo. 1994-197 (“We

cannot say that reliance on the advice of attorneys engaged by

the promoter of the program amounts to reasonable and prudent

conduct.”), affd. without published opinion 70 F.3d 1262 (4th

Cir. 1995).
                              - 16 -

     Dr. Altman’s own financial analysis does not support a

reasonableness defense because it was based on projected

cashflows taken from the private placement memorandum--

projections which were preceded by a conspicuous warning that

they were not to be relied upon.   This factual situation

resembles the factual situation in Kellen v. Commissioner, supra,

in which the taxpayer, a “well-educated and successful attorney

and a sophisticated investor”, prepared an analysis based on

projections set forth in an offering memorandum that were coupled

with a warning that they had been prepared for the general

partner, were unaudited, and were not to be relied upon.    We held

that “Any reliance on those projections was unreasonable.”11    Id.

Moreover, Dr. Altman testified that he invested in CAL-NEVA

knowing that the investment would provide a tax benefit--indeed,

the anticipated tax benefit was part of his financial analysis.

      The fact that Mr. Mohler prepared petitioners’ 1982 joint

Federal income tax return is insufficient to demonstrate that

petitioners exercised due care in deducting losses relating to

CAL-NEVA.   Although Dr. Altman testified that at some point he



     11
      Dr. Altman testified that he attempted to verify the
projected cashflows set forth in the private placement memorandum
by doing “literature research” and by talking to Mr. Pace. There
is no documentary evidence as to the nature of his research, and
his testimony is too vague to support a finding that his
discounted cashflow analysis was reasonable.   Also, as we have
noted, his reliance on Mr. Pace was unreasonable in light of Mr.
Pace’s obvious conflict of interest.
                               - 17 -

reviewed the tax consequences of his investment in CAL-NEVA with

Mr. Mohler, he could not remember which documents he had shown

Mr. Mohler, which is understandable given the more than 25 years

that had passed since the events at issue had occurred.

Moreover, according to Dr. Altman, Mr. Mohler “questioned the

business of the profit motive” but Dr. Altman reassured him “that

I had done the analysis of it and it looked like there would be a

profit even under a very conservative set of circumstances.”    In

any event, Mr. Mohler did not provide petitioners with a written

opinion concerning their investment in CAL-NEVA and he did not

testify at trial.12   Because of this dearth of evidence, we are

unable to conclude that Mr. Mohler did anything more than

transfer the losses from the Schedule K-1 provided by CAL-NEVA

onto petitioners’ 1982 return.   See Skeen v. Commissioner, 864

F.2d 93, 96 (9th Cir. 1989) (“Mr. Skeen also claims that he

relied on advice given to him by co-workers whose experience he

respected. However, no reliable evidence exists in the record

suggesting the nature of the advice, if any, that he received

from them.”), affg. Patin v. Commissioner, 88 T.C. 1086 (1987).

     In the end, petitioners have not demonstrated that a fully

informed, competent tax professional advised them regarding the

propriety of their claimed deduction in 1982 for a loss relating


     12
      Petitioners did not attempt to call Mr. Mohler as a
witness in this case, and there is no evidence suggesting that he
was unavailable to testify.
                               - 18 -

to their investment in CAL-NEVA.   That is particularly

troublesome considering that they invested $5,000 in CAL-NEVA on

December 29, 1982--2 days before the end of that year--and that

same year claimed a $12,932 deduction for a loss relating to that

investment.13   Under the circumstances, petitioners acted with a

lack of due care in claiming as a deduction on their 1982 joint

Federal income tax return an ordinary loss of $12,932 relating to

their interest in CAL-NEVA.   Consequently, petitioners are liable

for the section 6653(a)(1) and (2) additions to tax.14

     The Court has considered all of petitioners’ contentions,

arguments, requests, and statements.    To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.




     13
      Although petitioners also signed a promissory note for
$9,250, it is questionable that they made even a single payment
of $973 toward principal on that note. In any event, they did
not pay the note in full. They stopped making payments on the
note in 1988 or 1989--6 or 7 years after they signed the note--
even though the note was for a 16-year term.
     14
      Because reasonableness inquiries are highly factual and
because the facts underlying Allison v. United States, 80 Fed.
Cl. 568 (2008), differ materially from the facts of petitioners’
case, their reliance on that opinion does not aid them in
establishing their reasonable reliance defense. For example, the
reasonable reliance defenses in Allison were all supported by the
testimony of witnesses (albeit who were associated with the
investment) upon whom the taxpayers had relied. See id. at 577.
No one other than Dr. Altman testified on petitioners’ behalf in
this case.
                        - 19 -

To reflect the foregoing,


                                  Decision will be entered

                             for respondent.
