Robert D. and Patricia K. Kaliban, et al. - Page 20

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            tax return, the Rolands reported gross income from wages,                                 
            interest, dividends, State and local tax refunds, and capital                             
            gains in excess of $236,000.                                                              
                  Roland acquired a 1.547-percent interest in Poly Reclamation                        
            for $12,500 in 1981.  As a result of the investment in Poly                               
            Reclamation, on their 1981 Federal income tax return the Rolands                          
            claimed an operating loss in the amount of $9,977 and an                                  
            investment tax and business energy credit in the amount of                                
            $21,584.  Respondent disallowed the Rolands' claimed operating                            
            losses and credits related to Poly Reclamation in full.                                   
                  Roland learned of the Plastics Recycling transactions and                           
            Poly Reclamation from Alter.  Alter told Roland that he and                               
            others at Shea & Gould were investing in a Plastics Recycling                             
            transaction and that Roland could participate as well if he                               
            wished.  Roland discussed the Plastics Recycling transactions                             
            with Alter and Feinstein.  He understood that Feinstein had                               
            conducted most of the research into the Plastics Recycling                                
            transactions, but at trial Roland could not recall what research                          
            Feinstein had done.  Roland did not know and did not ask what the                         
            assets of Poly Reclamation were.  At trial, he could not recall                           
            who manufactured the Sentinel recyclers or whether Feinstein or                           
            Alter had investigated suitable end-users for the machines or had                         
            inquired about existing competition.  Roland did not read the                             
            Poly Reclamation offering memorandum or otherwise learn about the                         
            investment apart from discussing it with Alter and Feinstein.  He                         

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