John Sann and Marianne Sann, et al. - Page 24

                                       - 24 -                                         
          $17,637 and an investment tax and business energy credit totaling           
          $35,094.10  Respondent disallowed Addington's claimed operating             
          losses and credits related to Empire, Plymouth, and Foam in full,           
          except for the operating losses from Empire and Plymouth claimed            
          on his 1982 return.  In addition, with respect to Empire,                   
          respondent determined that Addington had a distributive share of            
          income in the amount of $2,500 for 1981.                                    
               Addington learned of the Plastics Recycling transactions and           
          the Partnerships from Maxfield at a firm meeting.  At the                   
          meeting, Maxfield briefly described the transactions and made an            
          offering memorandum available for review.  Addington spent                  
          approximately 1 hour perusing it.  He did not check the figures             
          in the cash-flow analysis section of the offering memorandum.               
          Although he was aware of the tax benefits, Addington claims that            
          he had no idea how they were derived.  At trial, Addington could            
          not recall ever having met Roberts.  He could not recall reading            
          that the tax benefits were generated by the purported value of              
          the machine, nor could he recall reading about any potential                
          conflicts of interest.                                                      
               After reviewing the offering memorandum, Addington spoke to            
          Maxfield.  He understood that Maxfield's investigation had                  
          entailed speaking to Roberts and Taggart, and he also was aware             


          10   Addington claimed an investment credit totaling $35,498 on             
          his 1982 return.  Of that amount, $35,094 derived from Foam.  The           
          investment tax credit and business energy credit generated by               
          Foam each were in the amount of $19,192.  However, his business             
          energy credit was subject to limitation of $15,902.                         



Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  Next

Last modified: May 25, 2011