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oriented venture in plastics recycling equipment. Triemstra and
Cohn had no first-hand contact or discussion with Roberts or
Grant; they relied exclusively on Kravitz' judgment.
Moreover, the Northeast transaction was not a type of
investment encouraged by the Federal Government. 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 of $40,174. In the first year
of the investment alone, petitioners Triemstra and Cohn each
claimed an operating loss in the amount of $5,424 and investment
tax and business energy credits related to Northeast totaling
$11,308, while their cash payment for the investment in Northeast
was only $6,000 each; Kravitz claimed an operating loss of $4,068
and investment credits totaling $8,482 on a cash outlay of
$4,500. The direct reductions in petitioners' Federal income
tax, from just the tax credits, equaled 188 percent of their cash
payments for the investments. Therefore, like the taxpayers in
Provizer v. Commissioner, T.C. Memo. 1992-177, "except for a few
weeks at the beginning, petitioners never had any money in the
[Northeast] deal." While the Government may have been
encouraging energy conservation, it was not providing tax
benefits for supposed investments that actually were shams and
lacked economic substance. See Greene v. Commissioner, 88 T.C.
376 (1987).
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