Donald N. and Rosemarie F. Merino - Page 13
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US Tax Court > 1997 > Donald N. and Rosemarie F. Merino - Page 13
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In 1981, through a nominee, petitioner acquired a 24-percent
interest in two limited partnership units in Northeast for
$24,000.4 As a result of petitioner's investment in Northeast,
on their 1981 return petitioners claimed an operating loss in the
amount of $19,526.16, and investment tax and business energy
credits totaling $22,431.29.5 Petitioners carried back a total
of $18,279 in unused business energy credits to their 1978, 1979,
and 1980 returns.6 Respondent disallowed petitioners' claimed
operating loss and credits related to Northeast in full.
Petitioner learned of the Plastics Recycling transactions
and Northeast from a personal friend Norman Lewis (Lewis), who
was a C.P.A. Lewis was considering the Plastics Recycling
transactions for some of his clients, and he asked petitioner to
examine the proposal. Petitioner agreed to do so, and Lewis sent
him the offering materials for Northeast and another Plastics
Recycling partnership. Before and after reviewing the offering
materials, petitioner spoke to Roberts. Petitioner questioned
whether PI was "a real company" and whether it had a "real
4 Petitioner's nominee was Norman Lewis (Lewis). Lewis
acquired a 10.421050-percent interest in Northeast for $100,000.
Petitioners therefore indirectly owned an approximately 2.5
percent interest in Northeast (24 percent x 10.421050 percent =
5 Petitioners' interest in Northeast generated $20,355 in
investment tax credits and $20,355 in business energy credits.
However, their business energy credit was subject to limitation
in the amount of $2,326.
6 The record does not reveal the respective amounts of the
claimed carrybacks to petitioners' 1978, 1979, and 1980 returns.
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