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partnerships constituted nothing more than an elaborate tax
shelter scheme, as follows:
In summary, presented to us in this case is a
chain or multilayered series of obligations, stacked or
multiplied on top of each other via the numerous
partnerships to produce debt obligations in staggering
dollar amounts, using a largely undeveloped and
untested product, in a highly risky, very speculative,
and nonarm's-length manner in an attempt to generate
significant tax deductions for investors. The
transactions did not, and do not, constitute legitimate
for-profit business transactions. [Id. at 175-176.]
On the basis of our findings and opinion in Krause, the
affirmance thereof by the U.S. Court of Appeals for the Tenth
Circuit, and the denial of certiorari by the U.S. Supreme Court,
thousands of investors who had invested in Barton and in other
related limited partnerships, including Drake, settled their
Federal income tax liabilities with respondent relating to these
investments. Petitioner herein and respondent, however, have not
been able to reach a settlement agreement, and petitioner alleges
the existence of material facts that he believes distinguish his
limited partnership investment in Drake from the investments that
were made by the taxpayers in Barton and that were specifically
addressed in Krause.
We issued a show cause order, and we held an evidentiary
hearing in connection with our show cause order to give
petitioner an opportunity to establish how, for Federal income
tax purposes, his limited partnership investment in Drake and the
activities of Drake were distinguishable from the limited
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