- 32 -
these cases. In the Krause case, the taxpayers invested in
limited partnerships whose investment objectives concerned
enhanced oil recovery (EOR) technology. The Krause opinion
states that during the late 1970's and early 1980's, the Federal
Government adopted specific programs to aid research and
development of EOR technology. In holding that the taxpayers in
the Krause case were not liable for the negligence additions to
tax, this Court noted that one of the Government's expert
witnesses acknowledged that "investors may have been
significantly and reasonably influenced by the energy price
hysteria that existed in the late 1970's and early 1980's to
invest in EOR technology." Id. at 177. In the present cases,
however, as explained by respondent's expert Steven Grossman, the
price of plastics materials was not directly proportional to the
price of oil, and there is no persuasive evidence that the so-
called oil crisis had a substantial bearing on petitioners'
decision to invest. While EOR was, according to our Krause
opinion, in the forefront of national policy and the media during
the late 1970's and 1980's, there is no showing in these records
that the so-called energy crisis would provide a reasonable basis
for petitioners' investing in recycling of polyethylene,
particularly in the machinery here in question.
In addition, the taxpayers in the Krause opinion
investigated EOR technology specifically. One of the taxpayers
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011