- 34 -
(1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d 1024
(10th Cir. 1994), is misplaced. The facts in Krause v.
Commissioner, supra, are distinctly different from the facts of
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. Id. at 135-136. 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 1970s and early 1980s 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 petitioner's
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 petitioner's investing in recycling of polyethylene,
particularly in the machinery here in question.
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