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plastics recycling. However, Keith contends that he decided to
invest in Hamilton based upon Mejia’s and Grande’s advice.
Ultimately, Keith was unable to invest in Hamilton because
partnership interests in Hamilton were no longer available by the
time he decided to invest. Then Mejia told Keith that interests
in Masters, another recycling limited partnership identical to
Hamilton, were available. Keith received the Masters offering
memorandum, but he did not thoroughly review the Masters offering
memorandum because it was duplicative of the Hamilton offering
memorandum.
For 1979, 1982, 1983, and 1984, Keith and Marilyn West filed
joint Federal income tax returns. In 1982, Keith invested
$25,000 in Masters. As a result of his investment in Masters,
Keith claimed net operating loss deductions of $19,616, $995, and
$460 on his 1982, 1983, and 1984 Federal income tax returns,
respectively. On his 1982 Federal income tax return, Keith also
claimed investment tax and business energy credits totaling
$38,500, which was limited by his 1982 income tax liability (as
reduced by the partnership loss) and the alternative minimum tax.
On April 20, 1983, Keith filed an application for tentative
refund, Form 1045, carrying back investment and business energy
tax credits to 1979 to generate a tax refund of $16,161.
Keith did not actively monitor his investment in Masters.
At trial, Keith testified: “[T]here wasn’t a lot you could do to
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