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the production, marketing, and distribution of medical
educational video tapes. The District Court found that the
taxpayer's personal expertise and insight in the underlying
investment gave him reason to believe it would be economically
profitable. Although the taxpayer was not experienced in
business or tax matters, he did consult with an accountant and a
tax lawyer regarding those matters. Moreover, the District Court
noted that the propriety of the taxpayer's disallowed deduction
therein was "reasonably debatable." Id. at 93-6447, 93-2 USTC
par. 50,585, at 89,895; see Zfass v. Commissioner, T.C. Memo.
1996-167.
Neither petitioners nor Becker had any formal education,
expertise, or experience in plastics recycling. Neither Cohen,
Steele, nor Hertan ever represented that he was expert in
plastics recycling and Fredericks and Fishbach had no reason to
believe otherwise. The records indicate that none of petitioners
or their purported advisers had any personal insight or industry
know-how in plastics recycling that would reasonably lead them to
believe that the Plastics Recycling transactions would be
economically profitable. Although Fredericks served on the board
of a plastics molding company, there is no showing in docket No.
21847-90 that this gave him special insight into plastics
recycling. Moreover, when he purportedly spoke to Porter about a
polyethylene or polystyrene recycler, he sought no advice
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