also be available to assist the lessee’s counsel in
defense before the U.S. District Court, U.S. Tax Court
or the U.S. Court of Claims.
Encore's prospectus contains in substance only one page,
discussing in general terms the gospel record market, the home
computer game market, and educational computer programs. The
prospectus does not specifically address the master recordings,
the computer games, or the computer programs that Encore intends
to lease, the quality of such, nor any other facets of the Encore
program.
The “How Our Program Works” section of the prospectus is one
page in length containing four paragraphs. Three paragraphs are
devoted to the tax aspects of the program, and one paragraph
refers to the lease agreement. The remainder of the page
outlines in tables the amount of advance payment required from
the lessee and the amount of investment tax credit passed through
to the lessee. The "Financial Section" of the prospectus
contains two paragraphs and explains the investment tax credit
available with respect to the sound recordings and computer
software. There is no analysis in the prospectus of the
potential nontax, economic profitability of its leasing program.
Also, there is no information in the prospectus regarding the
marketability of the master recordings that Encore intends to
lease, nor any information concerning how master recordings can
be marketed. Petitioner had a copy of the Encore prospectus, the
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Last modified: May 25, 2011