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investment tax credit purposes in the energy systems that it
leased from Saxon Energy.
Petitioners filed a joint Federal income tax return for 1983
(return) on or before April 15, 1984, that was prepared by Mr.
Amsterdam. They did not know how partnership deductions, losses,
and investment tax credits are calculated for Federal income tax
purposes, and they relied on Mr. Amsterdam to determine, inter
alia, any such deductions, losses, and/or credits that they
claimed in their 1983 return, including those arising as a result
of petitioner's partnership interest in Ridge Energy. Petition-
ers claimed a total partnership loss of $21,279 in Schedule E
(Supplemental Income Schedule) of their 1983 return (1983 Sched-
ule E). An attachment to petitioners' 1983 Schedule E showed
that that loss is attributable to a $7,360 loss with respect to
Tricat, the medical facility in which petitioner invested, and a
$13,919 loss with respect to Ridge Energy, the partnership in
which petitioner invested. In Form 3468 (Computation of Invest-
ment Credit) included as part of their 1983 return, petitioners
claimed a basis for investment tax credit purposes of $210,863,
of which $208,990 is attributable to Ridge Energy, and an invest-
ment tax credit of $21,086, of which $20,899 is attributable to
Ridge Energy.
On August 6, 1987, respondent issued a Notice of Final
Partnership Administrative Adjustment (FPAA) to the tax matters
partner for Ridge Energy in which respondent disallowed the loss
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