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deciding to invest in Whitman he “felt confident of * * *
[Clothier’s] ability and expertise” because in “all of the * * *
[investments] that I’ve been involved with Kirk [Clothier], he
has invested in the same ones”. Petitioner also explained that
the Whitman Recycling transaction “was the second involvement I
had with Kirk Clothier.”
Petitioner was introduced to the Whitman investment by
Clothier. Clothier explained to petitioner that investing in
Whitman could serve three purposes: To make money, to shelter
taxes, and to help the environment. Petitioners paid $25,000 for
a 2.75-percent limited partnership interest in Whitman.
Petitioners did not personally review Whitman’s offering
memorandum or investigate Whitman before becoming participants in
the partnership. Nor did petitioners have any education or work
experience in the plastics materials or the plastics recycling
industry.
As a result of their payment of $25,000 for their interest
in Whitman, petitioners claimed on their 1982 Federal income tax
return a net operating loss deduction of $19,635. They also
claimed investment credits totaling $38,763, which was limited to
their 1982 income tax liability (as reduced by the partnership
loss) of $24,815. Of the $13,948 balance of the unused credits,
$8,007 was carried back to 1979, generating a tax refund claim of
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Last modified: May 25, 2011