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Petitioners each contend that they were reasonable in
claiming deductions and investment credits with respect to their
investments in the Partnerships. In support of such contentions,
petitioners each argue, in general terms: (1) That claiming the
deductions and credits with respect to the Partnerships was
reasonable in light of the so-called oil crisis during the years
in issue and (2) that they reasonably relied upon the offering
materials and a qualified adviser.
In the cases before us, expert testimony by report
establishes that the oil pricing changes during the late 1970's
and early 1980's did not justify petitioners' claiming excessive
investment credits and purported losses based on vastly
exaggerated valuations of recycling machinery. Also, we are
unconvinced by the claim of these highly sophisticated, able, and
successful investors that they acted reasonably in failing to
inquire about their investment and simply relying on the offering
circulars and on Becker, despite warnings in the offering
circulars and explanations by Becker about the limitations of his
investigation. In each case these taxpayers knew or should have
known better.
1. The So-Called Oil Crisis
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