William L. Richter - Page 8

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          Mr. Sparkman testified that HEH issued to petitioner a                      
          Certificate of Evidence of Right of Distribution of Hawaii                  
          Environmental Holdings (the certificate).  The certificate                  
          purported to evidence petitioner’s ownership of one beneficial              
          unit and HEH’s conveyance of the right to claim a Federal                   
          investment credit for $513 and a solar energy tax credit for the            
          State of Hawaii for $1,750.  The certificate, however, was not              
          executed by the trustee or by any other agent of HEH.                       
          Relevant Tax Returns                                                        
               For the taxable year 1995, HEH filed a Form 1041, U.S.                 
          Income Tax Return for Estates and Trusts, which reported a net              
          loss of $16,054.  HEH attached to its 1995 return a Schedule C,             
          Profit or Loss from Business, which reported the operating                  
          results from its sale of solar energy and showed a net profit of            
               In connection with its 1995 Form 1041, HEH issued a Schedule           
          K-1, Beneficiary’s Share of Income, Deductions, Credits, etc., to           
          petitioner indicating that HEH had allocated $513 to petitioner             
          as an energy credit.  The Schedule K-1 did not reflect that any             
          other item was allocable to petitioner for 1995.                            
               In accordance with the Schedule K-1 issued to him by HEH,              
          petitioner claimed a passthrough energy credit of $513 on Form              
          3468, Investment Credit, to his 1995 tax return.  Petitioner also           
          claimed a passthrough energy conservation tax credit of $1,750 on           
          his Form N-157, Credit for Energy Conservation, included as part            

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