- 44 -
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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