- 41 -
v. Commissioner, 87 T.C. 74, 77 (1986); Snyder v. Commissioner,
T.C. Memo. 1995-285; Sacks v. Commissioner, T.C. Memo. 1994-217.
We find petitioners' claims of financial naivete and ignorance,
particularly with respect to the nature and amount of the tax
benefits, disingenuous.14 The direct reductions claimed on
petitioners' 1981 tax returns, from the investment tax credits
alone, equaled 173 percent of their cash investments. Therefore,
like the taxpayers in Provizer v. Commissioner, supra, "except
for a few weeks at the beginning, petitioners [Kaliban, Roland,
Weber, and Zimmer] never had any money in the * * * [Partnership
transactions]." A reasonably prudent person would have asked a
qualified adviser if such a windfall were not too good to be
true. McCrary v. Commissioner, 92 T.C. at 850.
The purported value of the Sentinel EPE recycler generated
the deductions and credits in these cases, and that circumstance
was reflected in the offering memoranda. Petitioners chose not
to read the offering materials, but Alter and Feinstein did read
them. Certainly Feinstein recognized and understood the nature
of the tax benefits, and he discussed it with Alter. Together
they met with each of petitioners and, as Feinstein recalled:
14 In their posttrial briefs, petitioners claim that they "had
no knowledge of the extent of the tax benefits available to
investors in" the Partnerships or that "the tax benefits in the
first year would exceed" their respective investments. However,
the majority of the previous investments they had asked Alter and
Feinstein to review, if not all of them, were tax shelters. The
notion that Alter and Feinstein failed to highlight the amounts
of the tax benefits generated by the Partnerships is incredible.
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