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Petitioner’s contention that he reasonably relied on the
expert opinions of Ulanoff and Burstein is unjustified. He
testified that he had discussed the valuation of the recyclers
with Becker, Lewin, and Feinberg, and that Becker had told him he
could rely on the valuations in the memorandum. As discussed
below, Becker testified at length in Jaroff v. Commissioner, T.C.
Memo. 1996-527, and he said no such thing. Neither Ulanoff nor
Burstein was an expert in plastics or plastics recycling, and
both relied on information provided by PI and other parties
related to the transaction in providing their reports. In
addition, Ulanoff and Burstein each owned an interest in at least
one partnership that owned recyclers as part of the Plastics
Recycling program. See, e.g., Jaroff v. Commissioner, T.C. Memo.
1996-527. Petitioner did not independently obtain these
individuals’ advice but rather received their reports as part of
the promotional material received from SAB Foam. Reliance on the
memorandum, and the reports therein, is simply an inadequate
defense for petitioners. Given the well-disclosed fact that the
investment and energy tax credits generated by SAB Foam depended
on the fair market value of the recyclers, petitioner should have
made inquiries about the value of the recyclers rather than
merely relying on the promotional reports of Ulanoff and
Burstein.
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