Hyman S. and Gaile S. Zfass - Page 5

                                         -5-                                          
          letter that was attached to the memorandum, informed a potential            
          investor that the Internal Revenue Service (IRS) had been                   
          conducting a “tax shelter program” to identify and examine                  
          “abusive” tax shelters and that such a program “increases the               
          likelihood that the Partnership’s and a Partner’s return may be             
          audited.”  The private placement memorandum also informed the               
          reader that the depreciation deductions and investment tax credit           
          that the partnership intended to claim and pass through to its              
          partners would be based on a fair market value of each master video         
          disk of $877,663, and that there was no assurance “that the Masters         
          could be sold for the appraised value or that the lease fee program         
          will provide the Partnership with a fair return on equity.”                 
               Petitioner discussed the possibility of purchasing an interest         
          in the partnership with Freasier.  Petitioner knew that acquiring           
          an interest in the partnership would provide him with immediate and         
          future tax advantages.  In particular, he understood that he would          
          receive tax benefits of up to $3.80 for each $1 invested.                   
               After petitioner became a limited partner in the partnership,          
          the partnership’s tax return was audited by the IRS.  As a result           
          of this audit, on February 27, 1987, the IRS sent petitioners, and          
          other partners in the partnership, a notice of final partnership            
          administrative  adjustment  (FPAA)  for  1982  and  1983.  The              
          partnership's tax matters partner thereafter filed a petition in            
          this Court to contest the adjustments contained in the FPAA.                






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011