Kent J. and Ruth W. Dawson - Page 7

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               I guess it would be awkward for us to talk about anything,             
               including the weather.                                                 
               Sam, I hope this limited amount of information has some                
               usefulness for you and [petitioner]. Frankly, I never                  
               dreamed four years ago that I would need to reconstruct my             
               slight involvement with a "peripheral" fellow being.                   
               [Emphasis added.]                                                      


          In August 1984, Gersten, Savage, Kaplowitz & Simensky (Gersten),            
          the law firm representing the partnership, wrote petitioner and             
          demanded the second payment of $61,200.  Gersten explained that             
          failure to pay would result in a forfeiture of petitioner's                 
          partnership interest and a loss of all tax advantages stemming              
          from MSA in 1984.  Petitioner assured Gersten that payment was              
          forthcoming but that it was made with "great reluctance" and that           
          it should "not be construed as a waiver of any claims" which may            
          arise from his investment in MSA.4                                          
               In October 1984, petitioners filed their 1983 joint Federal            
          income tax return, wherein they claimed an ordinary loss of                 
          $35,539 and an investment tax credit of $79,441 relating to their           
          investment in MSA.  The tax credit was calculated using the                 
          unadjusted basis ($993,014) of the tapes as reported by MSA on              
          the Schedule K-1.  Petitioner also claimed carryback credits for            




          4    In 1985, petitioner filed suit against Geldbach and Klar,              
          and joined in a suit against McGraw-Hill allegedly for                      
          preparation of a fraudulent appraisal.                                      





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