Lawrence R. Roberson - Page 5

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          of a master recording or the likelihood of success of a                     
          recording artist.                                                           
               In November 1982, Cunningham provided petitioner with a                
          promotional booklet entitled "Southampton Music Company: 1982-              
          1983 Program".  The promotional booklet emphasizes the tax                  
          benefits of investing in a master recording rather than any                 
          economic benefits that could be expected.  The booklet includes             
          a 36-page tax opinion by Joseph Wetzel, an attorney in Portland,            
          Oregon.  The tax opinion discusses the tax benefits of the                  
          investment and potential tax problems that could be raised by               
          the Internal Revenue Service and ways to avoid them.  The                   
          promotional booklet also contains a chart entitled "Table of                
          Advance Lease Payments and First Year Tax Benefits" with four               
          levels of escalating investments with escalating tax benefits.              
          For example, according to the chart, a cash investment of                   
          $31,000 in a master recording valued at $400,000 would yield in             
          the first year an investment tax credit of $40,000 and a tax                
          deduction of $26,000.                                                       
               Petitioner asked William Parnell, an acquaintance who was a            
          return preparer and an enrolled agent before the Internal                   
          Revenue Service, to review the Southampton promotional booklet.             
          According to petitioner,2 Parnell's assessment of the                       



          2  Parnell did not testify in this case.                                    




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