Oreland A. and Lucille S. Thornsjo - Page 17




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               Sometime during 1978, Woolf met Schluter.  Thereafter                  
          Schluter prepared Woolf’s and Ditch Witch’s tax returns.  In                
          addition, Schluter provided tax and business advice to Woolf.               
               In 1982, Schluter told Woolf about Hamilton.  As a result,             
          Woolf received and briefly reviewed the Hamilton offering                   
          memorandum, but he did not read the entire offering memorandum.             
               Before he invested in Hamilton, Woolf was informed that                
          Schluter had reservations as to the value of the recyclers.                 
          Nevertheless, Woolf did not take any further steps to determine             
          whether the recyclers were accurately valued.  Woolf has no                 
          education or work experience in the plastics recycling or                   
          plastics industries.                                                        
               In 1982, Woolf paid $25,000 for his partnership interest in            
          Hamilton.  Woolf contends that he invested in Hamilton because of           
          Schluter’s advice.  Woolf also contends that he participated in             
          Hamilton because he believed recycling was good for the                     
          environment.  Schluter told Woolf that Hamilton was a tax                   
          shelter.  Woolf understood the meaning of the term “tax shelter”            
          and knew that Hamilton was a tax shelter.                                   
               As a result of his partnership interest in Hamilton, on his            
          1982 Federal income tax return Woolf claimed a net operating loss           
          deduction of $19,578 and investment tax and business energy                 
          credits totaling $38,500, which was limited to his 1982 income              
          tax liability (as reduced by the partnership loss) of $18,266.              






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