Stuart A. and Harriet J. Gollin, et al. - Page 35

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          material in the SAB Recycling offering memorandum describing the            
          structure of the transaction.  He testified that he was unaware             
          that F & G Corp.'s evaluators had any conflicts of interest, that           
          Becker was the de facto general partner of SAB Recycling, or that           
          Becker would be receiving a fee as such.  Yet the offering                  
          memorandum disclosed Becker's ownership of SAB Management, the              
          fees accruing to the general partner, and also explained that               
          Miller was the attorney for and a business associate of Burstein.           
          Fredericks' discussion with Porter, who may have had some insight           
          into plastics and/or plastics recycling, did not address the                
          Sentinel EPE recycler or the Plastics Recycling transactions.  In           
          light of petitioners' lack of knowledge about and perfunctory               
          investigations of the Partnership transactions, we find their               
          claim that they reasonably expected an economic profit from the             
          Partnerships unconvincing, even taking into consideration the so-           
          called oil crisis.                                                          
               Moreover, petitioners did not explain how the so-called oil            
          crisis provided a reasonable basis for them to invest in the                
          Partnerships and claim the associated tax deductions and credits.           
          The offering materials warned that there could be no assurances             
          that prices for new resin pellets would remain at their then                
          current level.  One of respondent's experts, Steven Grossman,               
          explained that the price of plastics materials is not directly              
          proportional to the price of oil.  In his report, he stated that            
          less than 10 percent of crude oil is utilized for making plastics           




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