- 19 - petitioner argues that the Federal Government, by virtue of the energy tax credit, was encouraging this type of investment. Petitioner failed to explain how the so-called oil crisis, or the media coverage thereof, provided a reasonable basis for him to invest in Northeast and claim the associated tax deductions and credits. Instead, he testified that he made the decision with respect to Northeast "primarily as a speculation". The offering memorandum noted several business risks associated with Northeast, including the circumstances that there was no established market for the recyclers, that there could be no assurances that the recycled resin pellets would be marketable as new resin pellets, and that there could be no assurances that prices for new resin pellets would remain at their then current level. Moreover, during 1980 and 1981, in addition to the media coverage of the so-called oil crisis, there was "extensive continuing press coverage of questionable tax shelter plans." Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982). Furthermore, as respondent's expert Grossman noted in his written report, "a 300% increase in crude oil prices results in only a 30 to 40% increase in the cost of plastic products." The anticipated tax benefits, on the other hand, were stated in the offering materials. According to the Northeast offering memorandum, the projected benefits for each $50,000 investor were investment tax credits in 1981 of $84,813 plus deductions in 1981Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
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