William and Joan Spears - Page 44

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          accounting controls regarding the allocation of royalty payments            
          and PI's recordkeeping system in general.  In Provizer v.                   
          Commissioner, supra, this Court found that "PI had no cost                  
          accounting system or records."                                              
               Becker confirmed at trial that he relied on the offering               
          materials and discussions with PI personnel to establish the                
          value and purported uniqueness of the recyclers.  Becker                    
          testified that he relied upon the reports of Ulanoff and Burstein           
          contained in the offering materials, despite the fact:  (1)                 
          Ulanoff's report did not contain any hard data to support his               
          opinion; (2) Ulanoff was not an economics or plastics expert; (3)           
          Becker did not know whether Burstein was an engineer; and (4)               
          Burstein was a client of Miller's and was not an independent                
          expert.  In addition, as we found in the Provizer case, "Ulanoff            
          and Burstein each owned an interest in more than one partnership            
          which owned Sentinel Recyclers as part of the Plastics Recycling            
          Program."21  Provizer v. Commissioner, supra.                               


          21   Spears stipulated that Ulanoff owned a 1.27-percent interest           
          in Plymouth Equipment Associates and a 4.37-percent interest in             
          Taylor Recycling Associates, both partnerships that leased                  
          Sentinel Recyclers.  Spears also stipulated that Burstein owns a            
          2.605-percent interest in Empire Associates and a 5.82-percent              
          interest in Jefferson Recycling Associates, also partnerships               
          that leased Sentinel Recyclers.                                             









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