- 12 -
1216 (6th Cir. 1993), involved Sentinel expanded
polyethylene (EPE) recyclers. However, the EPS
recycler partnerships and the EPE recycler partnerships
are essentially identical. See Davenport Recycling
Associates v. Commissioner, T.C. Memo. 1998-347, * * *
affd. 220 F.3d 1255, * * * (11th Cir. 2000); see also
Gottsegen v. Commissioner, T.C. Memo. 1997-314 * * *
(involving both the EPE and EPS recyclers); Ulanoff v.
Commissioner, T.C. Memo. 1999-170 * * * (same).
A. The Private Offering Memorandum
In Barber v. Commissioner, supra, significant portions of
the Whitman offering memorandum were summarized as follows:
By a private placement offering memorandum dated
September 28, 1982 (the offering memorandum),
subscriptions for 18 limited partnership units in
Whitman were offered by the partnership’s promoter to
potential limited partners at $50,000 per partnership
unit. Pursuant to the offering memorandum, the limited
partners would own 99 percent of Whitman and the
general partner, Sam Winer, would own the remaining 1
percent. Also pursuant to the offering memorandum,
each limited partner was required to have a net worth
(including residence and personal property) in excess
of $1 million, or net income in excess of $200,000, for
each investment unit.
The offering memorandum stated that Winer would
receive $62,000 for administrative and other services
to be paid from the proceeds of the private placement
offering as “management fees”. The offering memorandum
also stated that the partnership would pay “fees of
purchaser representatives and selling commissions” from
the proceeds of the offering in an amount equal to 10
percent of the aggregate price of the units. Thus,
Winer would earn a 10-percent commission upon selling
an interest in the partnership. In addition, the
offering memorandum stated that Winer could “retain as
additional compensation all amounts not paid as
purchaser representative fees or sales commissions in
connection with the Offering”.
The face of the offering memorandum warned, in
bold capital letters, that “THIS OFFERING INVOLVES A
HIGH DEGREE OF RISK”. The offering memorandum also
warned that “An investment in the partnership involves
a high degree of business and tax risks and should,
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011