Albert R. and Phyllis F. Dworkin - Page 19

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            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 1981                              




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