- 50 -
(9th Cir. 1988), affg. Dister v. Commissioner, T.C. Memo. 1987-
217. According to the offering memoranda, for each $50,000
investor, the projected first-year tax benefits were investment
tax credits in excess of $82,500 plus deductions in excess of
$40,000.22 For Farrell's $25,000 investment in SAB Reclamation
in 1982,23 he and his wife Clotilde claimed an operating loss in
the amount of $20,050 and investment tax and business energy
credits in the amount of $41,856. As a result of Spears' $25,000
investment in SAB Recycling, he and his wife Joan claimed an
operating loss in the amount of $19,870 and investment tax and
business energy credits totaling $41,320.
The direct reductions claimed on Spears' and Farrell's
Federal income tax returns, from the investment tax credits
alone, ranged from 165 to 167 percent of their cash investments,
respectively, without taking into consideration any rebated
commissions and advance royalty payments. Therefore, after
adjustments of withholding, estimated tax, or final payment, like
the taxpayers in Provizer v. Commissioner, T.C. Memo. 1992-177,
"except for a few weeks at the beginning, petitioners [Spears and
Farrell] never had any money in the * * * [Partnership
22 The projected tax benefits for the Partnerships in the first
year of the investment, for each $50,000 investor, were as
follows: Investment tax credits of $82,639 plus deductions of
$40,037 for SAB Recycling in 1982, and investment tax credits of
$83,712 and deductions of $40,234 for SAB Reclamation in 1982.
23 The amounts set forth above as invested by petitioners are
the gross amounts invested, unreduced by any rebated commissions
or advance royalty payments.
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