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Becker and Green never represented to Morgan that they were
specialists in plastics and Morgan did not believe that they
were. Morgan has no work experience in plastics recycling. At
the time he made his investment, Morgan lived in or near
Pawtucket, which is just a short distance from Hyannis, the
location of PI. Morgan has been to Hyannis many times, but he
did not visit PI or see a Sentinel EPE recycler prior to making
his investment. He never asked whether there were any other
machines that could recycle low density polyethylene or
polystyrene. Morgan did not make any independent investigation
of the value placed on the recyclers. He was not aware of any
companies that would be suitable end-users for the recyclers.
Morgan never made a profit in any year from his investment in
Plymouth.
OPINION
We have decided a large number of the Plastics Recycling
group of cases.1 The majority of these cases, like the
1 Provizer v. Commissioner, T.C. Memo. 1992-177, affd. without
published opinion 996 F.2d 1216 (6th Cir. 1993), concerned the
substance of the partnership transaction and also the additions
to tax.
The following cases concerned the addition to tax for
negligence, inter alia: Zenkel v. Commissioner, T.C. Memo. 1996-
398; Estate of Busch v. Commissioner, T.C. Memo. 1996-342; Spears
v. Commissioner, T.C. Memo. 1996-341; Stone v. Commissioner, T.C.
Memo. 1996-230; Reimann v. Commissioner, T.C. Memo. 1996-84;
Bennett v. Commissioner, T.C. Memo. 1996-14; Atkind v.
(continued...)
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