- 36 -
and represented as a purchase in the amount of $124,500, the
Court of Appeals held that something more was required.
In the cases before us, petitioners claimed tax benefits
based on the assumption that they owned and leased, through the
Partnerships, an interest in $8,138,662 worth of recycling
machines. Based on investments ranging from $12,500 to $75,000,
petitioners each claimed a qualified investment in new investment
credit property with bases ranging from $103,361 to $620,167.
These inflated bases generated claims to first-year tax credits
ranging from $20,673 to $124,034, and claims to deductible losses
ranging from $10,158 to $60,952. Clearly these were substantial
transactions requiring careful investigation under the Anderson
case. Of petitioners' respective advisers, Bachmann did nothing
more than tour PI's plant in Hyannis, speaking only with
insiders, and Greene did nothing, relying exclusively on
Bachmann. Unlike the adviser in Anderson, no one at Bachmann,
Schwartz thoroughly investigated or educated himself in the
industry of the proposed investment. In view of the substantial
basis claimed for the interest of each petitioner in the
machinery (a substantial amount, and in each case, more than
eight times greater than the cash invested), from which the
investment credits stemmed, plainly something more was required.
Accordingly, we consider petitioners' reliance on the Anderson
case inappropriate.
11(...continued)
sure the venture was viable.
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