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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. A simple review of such information should have raised
serious questions in the minds of ordinarily prudent investors.
Based upon careful consideration of the record, we find that
petitioners failed to show that the instant case differs to any
material degree from the previously decided cases in which we
held the taxpayers liable for the additions to tax for negligence
in connection with their participation in Encore. Accordingly,
petitioners are liable for the additions to tax under section
6653(a)(1) and (2) due to negligence for the taxable year 1984.
To reflect the foregoing,
An appropriate order and
decision will be entered for
respondent.
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Last modified: May 25, 2011