George W. Brooke and Karen Brooke - Page 11

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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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