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Spears and Farrell both learned of the Partnership
transactions from Becker. Becker and Spears met in 1974 when
Spears attended board meetings and otherwise represented the
interests of a substantial investor in a company for which Becker
provided accounting services. Spears was impressed with Becker
and hired him to perform accounting and tax work for Spears
individually and for his company. During that time Spears was
also a client and friend of Farrell, and he recommended that
Farrell and Becker meet. Farrell hired Becker Co. to prepare his
returns. Becker also occasionally presented Farrell with tax-
advantaged investments and eventually provided advice in
connection with Farrell's joining Spears, Benzak. Farrell did
not rely on Becker with respect to general investment issues
because he did not think that was Becker's area of expertise. He
16(...continued)
Farrell and his wife were not entitled to any investment tax
credit or business energy tax credit from SAB Associates and SAB
Reclamation. In both the notice of deficiency and the amendment
to answer, however, respondent allowed $772 of the total
investment and business energy credits claimed by the Farrells.
The Farrells claimed a total of $42,242 in investment tax and
business energy tax credits. Of that amount, $41,856 derived
from their interest in SAB Reclamation (with a basis of $209,280
in the equipment, the investment tax and business energy tax
credits equal $41,856), and $386 was unrelated to SAB Reclamation
($42,242 - $41,856 = $386). Consequently, it appears that in
allowing $772 of total credits, respondent actually allowed $386
of credits related to SAB Reclamation.
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