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sophistication of the taxpayers, as well as the manner in which
they approached their investment. McPike v. Commissioner, T.C.
Memo. 1996-46. Compare Spears v. Commissioner, T.C. Memo. 1996-
341 with Zidanich v. Commissioner, T.C. Memo. 1995-382.
Petitioner maintains that he and his wife were reasonable in
claiming deductions and credits with respect to the Partnerships.
He claims that he (1) carefully read the SAB Recovery offering
memorandum; (2) intended and reasonably expected to make an
economic profit from the Partnerships in light of the so-called
oil crisis in the United States in 1981 and 1982; and (3)
reasonably relied upon Tucker as a qualified adviser on this
matter.
1. The Private Offering Memoranda
Petitioner testified that he relied in part upon the SAB
Recovery offering memorandum. He claimed that he and his wife
spent several consecutive evenings carefully reading it.
Petitioner did not indicate how much time, if any, he spent
reviewing the SAB Reclamation offering memorandum.
Each of the offering memoranda highlighted a number of tax
risk factors and 12 business risk factors, including the
following: (1) The Partnerships had no operating history; (2)
management of the Partnerships' business was dependent upon the
general partner, who had no experience in marketing recycling
equipment and who was required to devote only such time to the
Partnerships as such general partner deemed necessary; (3) the
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