- 36 -
opinion, in the forefront of national policy and the media during
the late 1970's and 1980's, there is no showing in these records
that the so-called energy crisis would provide a reasonable basis
for petitioners' investing in recycling of polyethylene,
particularly in the machinery here in question.
Moreover, the taxpayers in the Krause opinion were
experienced in or investigated the oil industry and EOR
technology specifically. One of the taxpayers in the Krause case
undertook significant investigation of the proposed investment
including researching EOR technology. The other taxpayer was a
geological and mining engineer whose work included research of
oil recovery methods and who hired an independent geologic
engineer to review the offering materials. Id. at 166. In the
present cases, petitioners were not experienced or educated in
plastics recycling or plastics materials. They did not
independently investigate the Sentinel recyclers or hire an
expert in plastics to evaluate the Partnership transactions.
In Rousseau v. United States, supra, the property underlying
the investment, ethanol producing equipment, was widely
considered at that time to be a viable fuel alternative to oil,
and its potential for profit was apparent. In addition, the
taxpayer therein conducted an independent investigation of the
investment and researched the market for the sale of ethanol in
the United States. In contrast, as we noted in distinguishing
Page: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 NextLast modified: May 25, 2011