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petitioners herein were highly educated, sophisticated, and
successful practicing attorneys with previous investment
experience individually or in practice. Kravitz counseled
clients on a number of real estate syndications and had reviewed
numerous offering memoranda. Cohn testified at trial that he had
syndicated almost 100 deals. Triemstra was an experienced
attorney and made investments in a gas exploration venture and a
mobile home park in 1981.
The taxpayers in the Heasley case actively monitored their
investment and, as the Fifth Circuit Court of Appeals stated,
intended to profit from the investment. We cannot reach similar
conclusions in the present cases. The record shows that of the
three petitioners, only Kravitz received updates reporting the
progress of the Sentinel EPE recyclers and financial statements
prepared by nonindependent accountants. Yet even though an
August 1982 update indicated to Kravitz that the recyclers were
not performing up to expectations, he decided to invest in more
recyclers that same year. The evidence in these cases is that
petitioners anticipated benefits primarily from tax savings.
Petitioners have failed to provide evidence of any serious
efforts to monitor the investment or reliable evidence of any
profit objective independent of tax savings. We consider
petitioners' arguments with respect to the Heasley case
inapplicable.
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