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for which he paid a total of $40,000 in cash. The amount of
recourse debt which petitioner assumed totaled $114,805.
Prior to investing in the partnership, petitioner had never
invested in an equipment leasing transaction. Petitioner spoke
to his accountant, Joseph R. Levin, three times about his
investment in the partnership. Petitioner never spoke to Barry
Goldwater, Jr., the general partner of the partnership, Herman
Finesod, the chairman of the board of Hambrose Reserve, or James
Harber or Ron Finerty, the other officers of Hambrose Reserve,
about this investment. Petitioner received the subscription
documents on November 21, 1985, the day he signed them.
Petitioner understood that the rents from Charterhouse would
be used to offset debt payments to Hambrose. He was not
concerned about the end-users because they were big companies.
Petitioner understood that the partnership's promissory note on
which he assumed personal liability would be paid in 1992. The
partnership never asked petitioner for additional contributions.
Petitioner knew that the investment would create tax losses,
and he had seen a schedule of projected tax losses for each
taxable year. Petitioner expected the investment to yield
phantom income in the third or fourth year. Petitioner knew that
phantom income is not an actual cash distribution.
OPINION
At-Risk
We must now decide whether petitioners were at risk for
their assumed liability in the context of the sale-leaseback
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