William and Joan Spears - Page 31

                                       - 31 -                                         
               Petitioners each argue that because plastics materials are             
          oil derivatives, they reasonably believed that the Partnership              
          transactions had good economic potential in light of the alleged            
          oil crisis in the United States during 1981.  However,                      
          petitioners failed to explain exactly how such supposed oil                 
          crisis provided a reasonable basis for them to invest in the                
          Partnerships and claim the associated tax deductions and credits.           
               The offering materials warned that there could be no                   
          assurances that prices for new resin pellets would remain at                
          their then current level.  One of respondent's experts, Steven              
          Grossman, explained that the price of plastics materials is not             
          directly proportional to the price of oil.  In his report, he               
          stated that less than 10 percent of crude oil is utilized for               
          making plastics materials, and that studies have shown that "a              
          300% increase in crude oil prices results in only a 30 to 40%               
          increase in the cost of plastics products."  Moreover, during               
          1980 and 1981, in addition to the media coverage of the so-called           
          oil crisis, there was "extensive continuing press coverage of               
          questionable tax shelter plans."  Zmuda v. Commissioner, 731 F.2d           
          1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982).                       
               Spears placed into the record several articles from Modern             
          Plastics and an energy projections report from the U.S.                     









Page:  Previous  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  Next

Last modified: May 25, 2011