- 55 -- 55 -
& G Corp. and his representation of Burstein, PI, and Grant, who
was the sole shareholder of ECI Corp. A careful consideration of
the materials in the offering memoranda in these cases,
especially the discussions of high writeoffs and risk of audit,
should have alerted a prudent and reasonable investor to the
questionable nature of the promised deductions and credits. See
Collins v. Commissioner, 857 F.2d 1383, 1386 (9th Cir. 1988),
affg. Dister v. Commissioner, T.C. Memo. 1987-217; Sacks v.
Commissioner, T.C. Memo. 1994-217.
In each of these consolidated cases the projected tax
benefits in the respective offering memoranda exceeded
petitioners' respective investments. According to the offering
memoranda, for each $50,000 investor, the projected first-year
tax benefits were investment tax credits in excess of $82,600
plus deductions in excess of $40,000. Specifically, the
projected investment tax credits and deductions for the
Partnerships in the first year of the investment for each $50,000
investor were as follows:
IT + BE Credits Deductions
SAB Recovery $82,639 $40,003
SAB Recycling 82,639 40,037
SAB Reclamation 83,712 40,234
As a result of Gollin's gross $12,500 investment in SAB
Reclamation, he and his wife Harriet claimed an operating loss in
the amount of $10,025 and investment tax and business energy
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