Robert D. and Patricia K. Kaliban, et al. - Page 22

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            Clearwater, on their 1981 Federal income tax return the Webers                            
            claimed an operating loss in the amount of $10,002 and an                                 
            investment tax and business energy credit in the amount of                                
            $21,584.10  Respondent disallowed the Webers' claimed operating                           
            losses and credits related to Clearwater in full.                                         
                  Alter introduced the Plastics Recycling transactions and                            
            Clearwater to the Webers in 1981.  As he recalled:  "I informed                           
            them of its availability and told them that I was investing in it                         
            and if they were interested they could participate as well."  The                         
            Webers decided to invest in Clearwater after discussing it with                           
            Alter and Feinstein.  Alter specifically recalled that he                                 
            explained to the Webers the nature of the investment and what                             
            might come out of this investment.  Aside from speaking with                              
            Alter, the Webers did not conduct any personal investigation with                         
            respect to Clearwater.                                                                    

            interest in the profits, losses, and capital of Clearwater during                         
            taxable year 1981.  However, in their petition, the Webers stated                         
            that they owned a one-quarter interest in a partnership unit, and                         
            several of the 1981 Schedules K-1, Partner's Share of Income,                             
            Credits, Deductions, etc. attached to Clearwater's 1981                                   
            partnership return (the Webers' 1981 Schedule K-1 was not among                           
            them), indicate that an investment of $12,500 yielded a 1.547-                            
            percent interest in Clearwater.                                                           
            10    On their 1981 return, the Webers claimed total credits in                           
            the amount of $21,655.                                                                    

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