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memorandum but concluded that for the most part they were boiler-
plate and overstated, included only to protect the promoters.
Petitioners never made any profit from their investment in
Clearwater. Petitioners did not contact the general partner,
Winer, at any time after their investment to inquire why the
investment did not generate the profits projected.
The projected tax benefits for the initial year of
investment described in Clearwater’s offering memorandum greatly
exceeded petitioners’ investment in Clearwater. In fact, the tax
benefits actually claimed by petitioners on their tax return for
the initial year of investment in Clearwater greatly exceeded
their investment in the partnership. For 1981, petitioners
claimed a loss of $9,995 as their distributive share of
Clearwater’s losses for the year, and they claimed an investment
tax credit in the amount of $11,542 and an energy tax credit in
the amount of $10,785.
In the notice of deficiency, respondent disallowed all the
claimed deductions and credits relating to petitioners’
Clearwater investment.
F. Ultimate Finding of Fact
At all relevant times, the fair market value of the Sentinel
EPE recyclers did not exceed $50,000 per machine.
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