- 55 -
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.
Neither petitioners nor Becker had any education, special
qualifications, or professional skills in plastics recycling or
plastics materials. Grelsamer was keenly aware of this and
certainly Morgan did not believe otherwise. None of them 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. Becker and
petitioners relied upon representations by insiders to the
Plastics Recycling transactions, and neither he nor petitioners
hired any independent experts in the field of plastic materials
or plastics recycling. Becker purportedly discussed the
transactions with Canno, who apparently was familiar with the
plastics industry, but Canno was not hired by Becker to
investigate PI and the Sentinel EPE recycler, never saw a
Sentinel EPE recycler, and never prepared any kind of formal,
written analysis of the venture. Accordingly, we consider
petitioners' arguments with respect to the Mollen case
inapplicable under the circumstances of these cases.
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