Albert R. and Phyllis F. Dworkin - Page 15

                                                 - 15 -                                                    
                  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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