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Petitioner had a financial stake in promoting the Plastics
Recycling leasing programs. He was paid $500 each time his
report was used in a private offering memorandum. This fact
provided petitioner with the incentive to assert, without much
independent investigation, that the Plastics Recycling programs
would be profitable.
Petitioner next presents us with the so-called oil crisis
argument. He asserts that after reading a number of articles
discussing the perceived oil crisis of the 1970's and the early
1980's, he reasonably concluded that investment in the Plastics
Recycling leasing programs would be profitable. He based this
conclusion on the fact that plastic is an oil derivative. He
indicated that during 1981 and 1982 the prevailing opinion was
that, due to the so-called oil crisis, the price of crude oil was
going to increase significantly. Finally, he relies on Krause v.
Commissioner, 99 T.C. 132 (1992), affd. sub nom. Hildebrand v.
Commissioner, 28 F.3d 1024 (10th Cir. 1994), and Rousseau v.
United States, 71A AFTR 2d 93-4294, 91-1 USTC par. 50,252 (E.D.
La. 1991), as support for his contention that his investment in
the Plastics Recycling leasing programs was reasonable in light
of rising oil prices.
Petitioner's so-called oil crisis argument has been made in
more than 20 of the plastics recycling cases. See, e.g.,
Provizer v. Commissioner, T.C. Memo. 1992-177; Merino v.
Commissioner, T.C. Memo. 1997-385; Singer v. Commissioner, T.C.
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