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Densification System (Regenolux), Buss-Condux Plastcompactor, and
Cumberland Granulator.12 See Provizer v. Commissioner, T.C.
Memo. 1992-177. Friedman did not explain what Hirshfield and
Trost did, if anything, to become aware of competing plastics
recyclers, aside from their visit to PI.
Friedman acknowledged that he is "sophisticated enough to
know that in any tax investment the underlying economics have to
be legitimate", and he stipulated to the effect that he
understood that the purported value of the Sentinel EPE recycler
generated the tax benefits he claimed on his return. He also
understood from Parker, the partner "primarily responsible" for
reviewing the tax aspects of the Plastics Recycling transactions,
that the tax benefits were supportable provided "that from a
business point of view this was a good economic investment".
Nonetheless, Friedman stipulated that he never saw a Sentinel EPE
recycler, or investigated the uniqueness of the machine, or
investigated whether the value placed on the recycler was bona
fide, or investigated whether there were any other machines that
were designed to recycle low density polyethylene. Friedman's
testimony about his modest investigation prior to investing in
12 Petitioners Alter and Friedman each stipulated to the
availability of the Foremost Densilator, Nelmor/Weiss
Densification System (Regenolux), Buss-Condux Plastcompactor, and
Cumberland Granulator during 1981.
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