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In 1981, Brodie acquired a 1.361-percent interest in
Plymouth for his investment of $12,500. As a result of the
passthrough from Plymouth, on their 1981 Federal income tax
return, the Brodies deducted an operating loss in the amount of
$10,158 and claimed investment tax and business energy credits
totaling $20,673. Respondent disallowed the Brodies' claimed
operating loss and credits related to their investment in
Plymouth.
Brodie earned a degree in business from New York University
in 1961. After graduation he worked at his family's luggage
manufacturing business, M & M Luggage. Brodie initially was
employed in various activities such as shipping, inventory, and
loading and unloading trucks. Over time, he was promoted to and
worked in the sales, production, and manufacturing departments.
Brodie learned of the Sentinel EPE recycler and Plymouth
from Greene, who was at the time a partner at Bachmann, Schwartz.
Greene provided accounting, business, and financial services to
both M & M Luggage and Brodie individually. Brodie discussed
with Greene the Plymouth investment, including the attendant tax
benefits, the price of the recyclers, and the visit to PI by
Bachmann and Abramson. At trial, Brodie recalled that Greene had
told him that he thought the machines were fairly priced and that
the investment would turn a profit. Brodie knew Greene had no
expertise in plastics and was not an engineer; he relied on him
for tax and investment advice. At trial, Brodie did not recall
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