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capable of independently researching the Sentinel recyclers and
forming a reasonable opinion as to their value, he did not do so.
In summary, we conclude that petitioner did not rely on
advice from Ulanoff, Burstein, WMDI, or Boylan & Evans, but that
even if petitioner had relied on such advice, such reliance would
have been unreasonable.
We now turn to petitioner's second argument; i.e., that
petitioner's investment in the Sentinel recyclers was reasonable
because petitioner expected to make a profit. Specifically,
petitioner projected that his recyclers could process between 200
and 400 pounds of expanded polystyrene and polyethylene per hour
for 7,000 hours per year, and would earn a profit of between 20
and 30 cents per pound. Based on these calculations, petitioner
projected that, with respect to both the Sentinel EPE and EPS
recyclers, he would receive an annual cash flow of between
$280,000 and $840,000 per machine per year (200 lbs./hr. x 7,000
hr. x $.20 profit/lb., and 400 lbs./hr. x 7,000 hours x $.30
profit/lb.).
We think that the assumptions on which petitioner based his
projections were not reasonable. Lindstrom reported that in
"average use situations", the Sentinel EPE recylcer recycled 200
pounds of expanded polyethylene per hour and the EPS recycler
recycled between 100 and 200 pounds of expanded polystyrene per
hour, roughly one-half of petitioner's estimate. We are also
reminded that petitioner, because he was the 100-percent owner of
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