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memorandum or in any manner attempt to research the business
aspects of the Plymouth transaction. In view of petitioners'
failure seriously to investigate or learn about the Plymouth
transaction, we are not convinced that they invested in Plymouth
with an honest objective of making an economic profit, regardless
of the so-called oil crisis.
Moreover, petitioners did not adequately explain how the so-
called oil crisis provided a reasonable basis for them to invest
in Plymouth and claim the associated operating loss and credits.
The offering memorandum warned that there could be no assurances
that prices for new resin pellets would remain at their then
current level. 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
materials and that studies have shown that "a 300% increase in
crude oil prices results in only a 30 to 40% increase in the cost
of plastics products." Furthermore, during 1980 and 1981, in
addition to the media coverage of the so-called oil crisis, there
was "extensive continuing press coverage of questionable tax
shelter plans." Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th
Cir. 1984), affg. 79 T.C. 714 (1982).
Petitioners' reliance on Krause v. Commissioner, 99 T.C. 132
(1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d 1024
(10th Cir. 1994), is misplaced. The facts in the Krause case are
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