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capital gains2 in the amount of $373,286, less $34,669 in losses
from partnerships, trusts, etc., including losses here in issue.
Consequently, in the absence of significant deductions or
credits, petitioners were subject to payment of Federal income
taxes in a substantial amount for taxable year 1981.
In 1981, petitioner acquired a 5.07-percent limited
partnership interest in Plymouth for $50,000. As a result of the
investment in Plymouth, on their 1981 return petitioner and his
wife Shirley claimed an operating loss in the amount of $40,555,
and investment tax and business energy credits totaling $82,526.
Respondent disallowed petitioners' claimed operating loss and
credits related to Plymouth in full.
Petitioner learned of the Plastics Recycling transactions
and Plymouth in November or December of 1981 from Abraham
Bramnick (Bramnick). Bramnick is a stockbroker with the
brokerage house Bond Richmond in New York City. Petitioner and
Bramnick have known each other socially since the late 1960's or
early 1970's. Prior to 1981, petitioner and Bramnick invested in
some initial public offerings (IPO's) together, and according to
petitioner, most of these were successful. Petitioner recalled
his introduction to the Plastics Recycling transactions and
Plymouth as follows:
2 The bulk of petitioners' income for 1981 derived from gross
capital gains in the amount of $313,523 ($292,960 of which was
short-term capital gain).
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