- 31 -
ventures, we find that petitioners' claims that they reasonably
expected an economic profit from the Partnership transactions are
incredible, 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
materials and that studies have shown that "a 300% increase in
crude oil prices results in only a 30 to 40% increase in the cost
of plastics products." Furthermore, during 1980 and 1981, in
addition to the media coverage of the so-called oil crisis, there
was "extensive continuing press coverage of questionable tax
shelter plans." Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th
Cir. 1984), affg. 79 T.C. 714 (1982).
Petitioners' reliance on Krause v. Commissioner, supra, and
Rousseau v. United States, 71A AFTR 2d 93-4294, 91-1 USTC par.
50,252 (E.D. La. 1991), is misplaced. The facts in Krause v.
Commissioner, supra, are distinctly different from the facts of
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