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angle design of the EPE recyclers and the purportedly unique
chemical process used to recycle the material) and warranted the
$1,162,667 price tag.
Although petitioner may have been more familiar with
chemical processes because of his college degree--or with machine
designs because of his limited patent law experience–-than the
average investor, it is clear that he did not have adequate
plastics industry knowledge to evaluate the investment. See
Addington v. Commissioner, supra. Petitioner did not have any
expertise in plastics recycling or evaluation of machinery,
including plastics recycling equipment, to evaluate competently
the profitability of the Clearwater transaction.
We have found that the EPE recyclers did not have a fair
market value of more than $50,000 and that the recyclers did not
have any unique features warranting their exorbitant pricetag.
By simply relying on petitioner’s limited knowledge and
experience, without independent research or consultation,
petitioners never made an adequate effort to learn that the EPE
recyclers were highly overvalued or the true nature of the
transaction as a sham.
There is also no indication that petitioners invested the
necessary time to gain the requisite expertise to evaluate their
investment. Petitioners claim that petitioner discussed the
investment with several partners in his firm, the majority of
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