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investment tax and business energy credits using a reported basis
in qualifying property of $223,126. That amount is 15 percent of
the total basis owned by the Selvin group (223,126/1,487,504 =
.15), which is the equivalent of an investment of only $27,000
(180,000 x .15 = $27,000) and a total interest in Scarborough of
2.74 percent (.18277 x .15 = .0274). Relying on the documentary
evidence, we find that the Selvins paid $27,000 for their
partnership interest in Scarborough.
As reported on Selvin's 1981 Form K-1 from Scarborough, the
Selvin group's share of Scarborough's operating loss equaled
$142,821, and its share of Scarborough's basis in the recyclers
was $1,487,504. The Selvins did not claim any portion of the
operating loss on their joint 1981 Federal income tax return but,
as noted, they did claim investment tax and business energy
credits totaling $44,626. Respondent disallowed these claimed
credits.
Selvin learned of the Plastics Recycling transactions and
Scarborough from Becker. He first met Becker on a trip to Israel
in approximately 1968 and the two have been friendly ever since.
Selvin has never referred a client to Becker, although on one
occasion Becker referred a client to Selvin. Becker gave Selvin
a copy of the Scarborough offering memorandum. Selvin spent
several hours reviewing the offering memorandum and discussed it
with Becker. Becker answered Selvin's questions and explained
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