- 45 -
recyclers approximated their fair market value. Neither of the
tax opinions purports to rely on any independent confirmation of
the fair market value of the recyclers. Rather, the tax opinions
refer to representations by PI and/or other entities involved in
the transactions for the value of the Sentinel EPE recycler. For
example, in the tax opinion appended to the offering memoranda
for Empire and Plymouth, WMDI states:
PI has represented that its pricing policies are a
trade secret, but that its price for the Sentinel
Recyclers to the company which will sell the machines
to the company from which the Partnership will lease
them is no less than it would charge any other
purchaser.
In the tax opinion appended to the Foam offering memorandum,
Boylan & Evans state that "PI, ECI, F & G [Corp.] and the
Partnership have represented to us that the prices paid by ECI
and F & G [Corp.] * * * were negotiated at arm's length." In
fact, as petitioners stipulated, no arm's-length negotiations for
the price of the Sentinel EPE recycler took place between or
among PI, ECI, and F & G Corp.
The offering memoranda for the Partnerships warned
prospective investors that the accompanying tax opinion letters
were not in final form and were prepared for the general
partner,22 and that prospective investors "MUST RELY UPON THEIR
OWN PROFESSIONAL ADVISERS WITH RESPECT TO THE TAX BENEFITS AND
22 Each of the offering memoranda notes that the opinion letter
of counsel "will be provided to the General Partner for his
individual guidance," and that prospective investors "are not
permitted to rely upon the advice contained therein."
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