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The offering materials clearly stated that there was no
established market for leasing or operating the recyclers.
Information published prior to the Plastics Recycling
transactions indicated that several machines capable of
densifying low density materials already were on the market.
Other plastics recycling machines available during 1981 ranged in
price from $20,000 to $200,000, including the Foremost
Densilator, Nelmor/Weiss Densification System (Regenolux), Buss-
Condux Plastcompactor, and Cumberland Granulator. See Provizer
v. Commissioner, T.C. Memo. 1992-177.
Petitioners have failed to show that Tomasetti, Frabotta,
Omohundro, or Finkle & Co. was qualified to evaluate the Sentinel
EPE recyclers and the Partnership transactions. Tomasetti was
skeptical of the recycler's inflated value, and he communicated
the results of his investigation and review to his clients.
Frabotta's and Tomasetti's testimony that they believed the
purported value of the recycler was supported by the economic
projections in the offering materials is without merit and not
credible. Petitioners knew that Tomasetti and Frabotta had no
education or expertise in plastics or plastics recycling, and
there is no reason to doubt that Tomasetti's reservations and
disclaimers were communicated to petitioners. A taxpayer may
rely upon his adviser's expertise (in these cases, accounting,
financial planning, and tax advice), but it is not reasonable or
prudent to rely upon an adviser regarding matters outside of his
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