Carl J.D. Bauman and Margaret A. Bauman - Page 7

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          3,520 acres of land in Harlan County, Kentucky (occasionally the            
          coal property), and that ERL would earn future income for its               
          partners by exploiting its rights under the lease.  The offering            
          materials consisted of 94 pages of information concerning the               
          offering and contained a discussion of a variety of matters,                
          including the partnership’s objectives, the terms of the                    
          agreement, potential risk factors, and related Federal tax                  
          issues.  Sixteen pages of the 94-page offering memorandum                   
          consisted of a discussion regarding the Federal income tax                  
          consequences relating to the offering.  Attachments to the                  
          offering memorandum included a tax opinion, a Coal Reserve                  
          Report, and accounting and productivity projections.  Although              
          many of these attachments were lacking in detail and specificity,           
          the tax opinion was an exception.  The tax opinion, which was               
          authored by the taxpayer in the Coggin case, exceeded 100 pages             
          in length and was extensive and thorough.  The offering                     
          memorandum also contained 12 exhibits.  Included among the                  
          exhibits were a copy of the limited partnership agreement, a copy           
          of the lease agreement, and copies of various partnership                   
          promissory notes.                                                           
               McIntyre was ERL’s managing general partner and the sponsor            
          of the offering materials.  ERL’s associate general partner was             
          McIntyre’s brother, Charles McIntyre.  The offering materials               
          advised potential investors that McIntyre was the president of              
          Economic Research Analysts, Inc. (ERA).  ERA was an entity with             

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