- 35 -
questionable tax shelter plans." Zmuda v. Commissioner, 731 F.2d
1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982).
Petitioners' reliance on Krause v. Commissioner, 99 T.C. 132
(1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d 1024
(10th Cir. 1994) and Rousseau v. United States, 71A AFTR 2d 93-
4294, 91-1 USTC par. 50,252 (E.D. La. 1991), is misplaced. The
facts in Krause v. Commissioner, supra, are distinctly different
from the facts of these cases. In the Krause case, the taxpayers
invested in limited partnerships whose investment objectives
concerned enhanced oil recovery (EOR) technology. The Krause
opinion states that during the late 1970's and early 1980's, the
Federal Government adopted specific programs to aid research and
development of EOR technology. In holding that the taxpayers in
the Krause case were not liable for the negligence additions to
tax, this Court noted that one of the Government's expert
witnesses acknowledged that "investors may have been
significantly and reasonably influenced by the energy price
hysteria that existed in the late 1970's and early 1980's to
invest in EOR technology." Id. at 177. In the present cases,
however, as explained by respondent's expert Steven Grossman, the
price of plastics materials was not directly proportional to the
price of oil, and there is no persuasive evidence that the so-
called oil crisis had a substantial bearing on petitioners'
decisions to invest. While EOR was, according to our Krause
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011