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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
$30,159.
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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