Derwyn J. Booker - Page 4

          It is unclear from the record the exact amount of petitioner’s              
          share of the initial investment in Encore.                                  
               Encore was incorporated on February 1, 1982.  Encore is in             
          the business of leasing master recordings of previously released            
          pop and gospel albums.  Master recordings are original recordings           
          of performances on audio tape used to produce disc records and              
          tapes for mass distribution.  In 1984, Encore leased master                 
          recordings for gospel records, educational computer programs, and           
          home computer games.                                                        
               Clint Collings (Collings) was the president and sole                   
          shareholder of Encore during the year at issue.  Encore's                   
          prospectus for 1984 consists of 24 pages, of which 14 pages are             
          cover sheets, table of contents, blank sample forms, and blank              
          pages.  Encore's promotional material for 1984 also includes a              
          51-page "Tax Opinion" and an 8-page addendum addressing 1984 tax            
          changes both prepared by Attorney Henry D. Nunez (Nunez).                   
               Although page 1 of the prospectus refers to an "exciting               
          business opportunity while taking advantage of current tax laws",           
          it mentions very little about said opportunity, while strongly              
          emphasizing the benefits derived from the investment tax credit.            
          The prospectus contains a letter from Mr. Nunez stating:                    
               upon request by Encore, we will assist a lessee and                    
               their counsel and accountants if the Internal Revenue                  
               Service challenges the tax structure of the transaction                
               as set forth in the Opinion and the lessee is unable to                
               reach a satisfactory resolution at the initial audit                   
               level.  Such assistance would include advice in                        
               connection with their appearances before the appellate                 
               division of the Internal Revenue Service.  We would                    

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