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Friedman used $9,290 on his 1981 return.2 Respondent disallowed
Friedman's claimed operating loss and investment credit flowing
from Clearwater.3
Friedman was told about the Plastics Recycling transactions
by several partners at Shea & Gould. Approximately eight
partners contemplated investing in a Plastics Recycling
transaction. Friedman understood that Stuart Hirshfield
(Hirshfield), a bankruptcy specialist at Shea & Gould, previously
had done business with Winer and thought well of him. Hirshfield
and two other partners, Dan Carroll (Carroll) and Lonn Trost
(Trost), each made inquiries about some aspects of the Plastics
Recycling transactions. Friedman also understood that Trost and
Hirshfield visited PI at least once and viewed some Sentinel EPE
recyclers. Alan Parker (Parker), a tax partner, reviewed the tax
2 Friedman's basis in the Clearwater Sentinel EPE recyclers
was $107,918. He had a basis in other property qualifying for
the investment tax credit in the amount of $3,211. Friedman's
tentative investment tax and business energy credits flowing from
Clearwater each totaled $10,792. However, Friedman's business
energy credit was subject to a limitation in the amount of zero,
and his regular investment credit was subject to a limitation in
the amount of $9,611. Of the total investment credit claimed in
1981 by Friedman, $9,290 was from Clearwater and $321 was from
other qualifying property. The record in docket No. 24753-89
does not disclose whether Friedman carried forward or back his
unused credits.
3 Respondent allowed $321 in investment tax credits related to
other property not at issue herein.
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