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credits and purported losses based on vastly exaggerated
valuations of recycling machinery.
Petitioners did not educate themselves in, or personally
investigate, the Plastics Recycling transactions. They did
nothing more than discuss the transactions with Alter and
Feinstein. Petitioners did not even read the offering materials.
Asked during his direct examination if he had any recollection of
the relationship between the projected profitability of Poly
Reclamation and the price of oil, and whether it was described to
him by Alter and Feinstein, Zimmer replied: "I don't believe
so." Based upon the records in these cases, we are not convinced
that petitioners gave due consideration to any business aspects
of the Partnerships. Petitioners have failed to show that they
intended and reasonably expected to make an economic profit from
the transactions, except from tax benefits.
Moreover, petitioners did not adequately explain how the so-
called oil crisis provided a reasonable basis for them to invest
in the Partnerships and claim the associated tax deductions and
credits. Although petitioners chose not to read them, the
offering memoranda warned that there could be no assurances that
prices for new resin pellets would remain at their then-current
level. Also, one of respondent's experts, Steven Grossman,
explained that the price of plastics materials is not directly
proportional to the price of oil. In his report, he stated that
less than 10 percent of crude oil is utilized for making plastics
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