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conducted. The opinion indicated that Boylan & Evans, in
expressing its opinion, relied on the statements of the general
partner and “other statements of fact and opinion furnished to us
by persons familiar with the transactions described in the
Memorandum.” Boylan & Evans’s conclusion about the fair market
value of the recyclers clearly was based on the assumption that
the parties to the transactions had negotiated prices at arm’s
length. In light of the close relationships existing among the
parties to the transactions and the enormous price paid for the
recyclers, petitioner should have questioned whether the prices
were in fact negotiated at arm’s length. Under these
circumstances, petitioner may not claim that he reasonably and in
good faith relied on Boylan & Evans’s tax opinion.
Petitioner’s contention that he reasonably relied on the
expert opinions of Ulanoff and Burstein included with the
offering memorandum also is unjustified. Both Ulanoff and
Burstein owned an interest in more than one partnership which
owned Sentinel Recyclers as part of the plastics recycling
program; thus their conclusions were unreliable. See Provizer v.
Commissioner, supra. Moreover, Ulanoff’s report contained no
elaboration about his basis for concluding that the price to be
paid for the recyclers by F&G and the rent to be paid by the
partnership were fair and reasonable. Given the well-disclosed
fact that the investment and energy tax credits generated by the
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Last modified: May 25, 2011