Robert D. and Patricia K. Kaliban, et al. - Page 30

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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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