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1981 and 1982 operating losses and credits related to his
investments in SAB Recovery and SAB Reclamation.8
During 1982, Busch acquired a 4.5-percent interest in SAB
Reclamation for $25,000. This amount is the gross amount Busch
invested, unreduced by any sales commission rebate or his share
of any advance royalty distributed to him. On their 1982 return,
he and his wife claimed an operating loss in the amount of
$20,050 and investment tax and business energy credits totaling
$41,856 with respect to his investment in SAB Reclamation. They
also claimed an operating loss in the amount of $1,145 with
respect to a 2.239819-percent interest Busch owned in SAB
Recovery. Respondent disallowed all but $65.60 of their claimed
operating losses and all of their credits related to the
investments in SAB Reclamation and SAB Recovery.
Sometime in the late 1970's, Snyder hired Becker to be his
accounting and financial adviser. During that time Snyder
introduced Becker to Busch, who soon thereafter also became a
client of Becker's firm. In 1981 Becker introduced the
Partnership transactions to Snyder. Becker believed that the
Partnership transactions would appeal to Snyder because Snyder
8 Snyder reported a total loss in 1982 from his partnership
interests in the amount of $124,012. In an attached statement
itemizing those losses, Snyder reported a loss from SAB Recovery
in the amount of $2,291. In the notice of deficiency, however,
respondent indicates that Snyder reported an operating loss of
$2,160 from SAB Recovery and disallowed that amount in full. The
reason for this discrepancy is unclear from the record.
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