Carl J.D. Bauman and Margaret A. Bauman - Page 15

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          produced from the coal property subsequent to that time.  The               
          mines were not reclaimed or restored to their premining                     
          condition, and ERL forfeited the reclamation bonds it had posted            
          in order to obtain the mining permits.                                      
          Mr. and Mrs. Bauman                                                         
               Neither Bauman nor Mrs. Bauman had any formal education,               
          training, or experience in coal mining.  Bauman purchased two-              
          thirds of a partnership unit in ERL.  This purchase was motivated           
          at least in part by Bauman’s prior participation in a coal mining           
          project promoted and managed by McIntyre.  Many of the partners             
          in Bauman’s law firm were also involved in McIntyre-related coal            
          projects.  Several of these partners were also limited partners             
          in ERL.  The members of the law firm routinely discussed with one           
          another the potential opportunities presented by an ERL                     
          investment.  Bauman’s preinvestment research of ERL was                     
          principally limited to these intrafirm discussions and a review             
          of the information contained in the offering materials.                     
               Petitioners maintain that respondent has erroneously                   
          determined that they are liable for the deficiencies, additions             
          to tax, and increased interest set forth at the beginning of this           
          opinion.  The essence of petitioners’ argument is twofold.                  
          First, petitioners maintain that ERL was a legitimate entity                
          organized and managed with a true and objective profit motive.              
          Petitioners also contend that they invested in ERL only after               

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