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magazine, and "just the thought of pursuing any other kind of
activity was just out of the question for * * * [him]."
Petitioner testified that he invested in the Partnerships to
obtain an additional source of income to help offset current and
future tuition bills of his children, as well as alimony payments
to his former wife. According to petitioner, the long-term
projected royalty payments, and not the tax benefits, primarily
induced him to invest in the Partnerships. Petitioners claimed
three children as dependents on their 1981 and 1982 returns.
They deducted alimony paid--in the amount of $3,600--only on
their 1981 return. Petitioners reported income from wages,
interest, and dividends in the amount of $154,209 in 1981, and in
the amount of $182,556 in 1982. Petitioner testified that, after
purportedly reading the SAB Recovery offering memorandum over
several nights, his primary concern was the risk of being
audited.
Petitioner testified that the tax benefits flowing from the
Partnerships were explained to him, and that he understood they
would exceed his cash invested. He was not so well informed or
concerned about the business aspects of the Partnerships,
however. Petitioner testified that he thought that the Sentinel
EPE recycler had an advantage over its competitors because "it
was supposed to be better * * * than the state-of-the-art
machines at that time," but the offering memoranda warned that PI
was not patenting the machine to protect against appropriation
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