Bruce and Lois Zenkel, et al. - Page 53

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          an operating loss in the amount of $19,871 and investment tax and           
          business energy credits totaling $41,320.  For their $27,000                
          investment, the Selvins claimed investment tax and business                 
          energy credits in the amount of $44,626.                                    
               The direct reductions in petitioners' Federal income tax,              
          from the investment tax credits alone, ranged from 149 percent to           
          170 percent of their cash investments, without consideration of             
          any rebated commissions or advance royalty payments.  Therefore,            
          after adjustments of withholding, estimated tax, or final                   
          payment, like the taxpayers in Provizer v. Commissioner, T.C.               
          Memo. 1992-177, "except for a few weeks at the beginning,                   
          petitioners never had any money in the * * * [Partnership                   
          transactions]."  In view of the disproportionately large tax                
          benefits claimed on petitioners' 1981 and 1982 Federal income tax           
          returns, relative to the dollar amounts invested, further                   
          investigation of the Partnership transactions clearly was                   
          required.  A reasonably prudent person would have asked a                   
          qualified independent tax adviser if this windfall were not too             
          good to be true.  McCrary v. Commissioner, 92 T.C. at 850.  A               
          reasonably prudent person would not conclude without substantial            
          investigation that the Government was providing tax benefits so             
          disproportionate to the taxpayers' investment of their own                  
          capital.                                                                    








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