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personally visited the Sentinel facility and had spoken with the
president of PI. Jacobson told petitioner that it was a viable
investment. Petitioner then purchased a $12,500 partnership
interest in Foam.
On his 1982 Federal income tax return, petitioner claimed a
loss of $10,101 as his distributive share of the partnership’s
reported loss for 1982. He also claimed a regular investment
credit and an energy investment credit in the aggregate amount of
$16,669. Thus, the tax benefits petitioner claimed for his
initial year of investment in the Partnership exceeded his
$12,500 investment. In 1986 petitioner filed an amended Federal
income tax return for 1982. On the amended return petitioner
deducted his $12,500 investment in Foam and reversed the credits
and net loss from the Partnership he claimed on his original 1982
return.
Foam was a so-called TEFRA partnership subject to the
unified partnership audit and litigation procedures set forth in
sections 6221 through 6233. See Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec. 402(a),
96 Stat. 648. On December 21, 1989, a notice of final
partnership administrative adjustment (FPAA) with respect to
Foam’s 1982 tax year was issued to petitioner and to Richard
Roberts, Foam’s general partner and tax matters partner. The
FPAA advised petitioner of adjustments to the 1982 Form 1065,
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