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result of his indirect investment in Foam, on his 1982 return
Cohn claimed an operating loss in the amount of $4,232 and
investment tax and business energy credits totaling $9,212.12
Respondent disallowed Cohn's claimed operating losses and credits
related to his indirect investments in Empire and Foam in full,
except for the operating loss from Empire claimed on his 1982
return. In addition, with respect to Empire, respondent
determined that Cohn had a distributive share of income in the
amount of $625 for 1981.
Cohn learned of the Plastics Recycling transactions and the
Partnerships from Maxfield. He reviewed an offering memorandum
for approximately 3 to 4 hours and then questioned Maxfield about
it. Cohn considered that the mechanics of the deal "would have
been [Maxfield's] strong suit and not mine." He described his
12 On his 1982 return, Cohn claimed a total investment credit
in the amount of $13,401. In his petition, Cohn asserts that his
distributive share of Jabrilach Recycling's investment tax credit
through Foam was $13,401.
However, Cohn's 1982 Schedule K-1, Partner's Share of
Income, Credits, Deductions, etc., attached to Jabrilach
Recycling's 1982 Form 1065, indicates that Cohn's share of basis
in the recyclers owned by Foam was $46,060. Accordingly, the
total investment tax and business energy credits available to
Cohn from his indirect interest in Foam was $9,212 ($4,606 each).
Cohn's 1982 return indicates that the additional $4,189 in
credits was comprised of $745 in investment tax credits from
other qualifying property, and carried over business energy
credits in the amount of $3,444. It is unclear from his 1982
return how much, if any, of the carried over business energy
credits was from Empire. Respondent disallowed Cohn's claimed
credits in full.
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