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Petitioner testified that before petitioner invested in
Northeast, Grant told him that he had investigated the Sentinel
EPE recyclers and that the recycling machine "was to the best of
his knowledge truly unique." Petitioner testified that, given
Grant's statement, he thought the question of the price of a
comparable machine was academic. Petitioner argues that there
should have been no comparable machine. In fact, there were at
least four other plastics recycling machines available during
1981, ranging in price from $20,000 to $200,000: Foremost
Densilator, Nelmor/Weiss Densification System (Regenolux), Buss-
Condux Plastcompactor, and Cumberland Granulator. See Provizer
v. Commissioner, supra.
Petitioner also contacted Roberts. Petitioner testified
that because Grant and Roberts shared office space and engaged in
business transactions together, petitioner presumed that Grant
considered Roberts to be a person of suitable moral character and
business competence. Petitioner also stated that he asked
Roberts whether he expected the IRS to question the price of the
recyclers for the tax credits. According to petitioner, Roberts
told him he would not be surprised if the IRS questioned the
purported price of the Sentinel EPE recyclers, but that he
believed there would be a compromise reducing the amount of
valuation by less than 20 percent. Petitioner accepted Roberts'
statement without further question.
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