Paul L. and Doris J. Triemstra, et al. - Page 18

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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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