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consequences of the transaction. Petitioners argue that
nothing in the Investment Memorandum, Tax Opinion,
Projections, or Appraisal should have caused petitioners
or any of the unitholders to doubt the reasonableness of
their expectation of profit from the transaction. In fact,
according to petitioners, the subject transaction offered
fewer tax benefits than those offered by other computer
leasing transactions at the time. Furthermore, according
to petitioners, an investor would not have entered into the
subject investment solely for tax purposes because the
investor would suffer a loss if there were no contingent
rents or proceeds from the sale of the equipment.
We are unable accept petitioners' view of the facts
for the following reasons. First, as discussed above,
our review of the Appraisal, Projections, Tax Opinion,
and Investment Memorandum shows that there are serious
questions that would have been evident to a reasonable
investor reviewing those documents. For example, among
other things, an investor would have certainly questioned
the fact that the Appraisal fails to provide the residual
value of the equipment upon expiration of the master
leases, the fact that there is a discrepancy between the
value of the computer equipment determined by the Appraisal
and the value used in the Projections, and the fact that
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