- 33 -
did he consult anyone outside of Becker Co. In addition,
petitioner and his wife did not carefully read the SAB Recovery
offering memorandum or seriously attempt to resolve the numerous
caveats and warnings therein. We are not convinced that
petitioner gave sufficient consideration to the business aspects
of the Partnerships to demonstrate that he really intended and
reasonably expected to make an economic profit from the
transactions, regardless of 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, 99 T.C. 132
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