- 26 -
the full extent of his investigation, such as his visit to PI,
speaking with Canno, and his research of trade journals to
confirm the price of plastic pellets. Becker never represented
that he was an expert in plastics materials or plastics
recycling. Selvin did not do any independent investigation of
the Sentinel EPE recyclers or plastics recycling in general. He
invested in Scarborough based solely on his review of the
offering materials and his discussions with Becker.
After the 1981 SAB Recycling Partnerships closed, Becker
paid Selvin's accounting firm to send an accountant to PI to
confirm, by serial number, that as of December 31, 1981, the
equipment that was leased to the 1981 SAB Recycling Partnerships
was indeed available for use. Becker arranged for this
verification, independent of PI, because he understood that the
investment tax and business energy credits would not be available
if the qualifying property was not available for use.
OPINION
We have decided more than 30 of the Plastics Recycling group
of cases.2 The majority of these cases, like the consolidated
2 Provizer v. Commissioner, T.C. Memo. 1992-177, affd.
without published opinion 996 F.2d 1216 (6th Cir. 1993),
concerned the substance of the partnership transaction and also
the additions to tax.
The following cases concerned the addition to tax for
negligence, inter alia: Estate of Busch v. Commissioner, T.C.
Memo. 1996-342; Spears v. Commissioner, T.C. Memo. 1996-341;
Stone v. Commissioner, T.C. Memo. 1996-230; Reimann v.
(continued...)
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