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credits with respect to the recycling equipment were zero,
instead of the $7 million claimed as the qualified investment on
the partnership tax return; and (3) increased SAB Foam’s “other
income” by $5,626.
Subsequently, SAB Foam’s TMP filed a petition with the
Court. On September 7, 1993, the Court entered a decision in SAB
Foam Recycling Associates 1982 v. Commissioner, docket No. 5103-
92. This decision reflected a full concession by SAB Foam of all
items of income (loss) and credit previously claimed for the
partnership.
E. Petitioners’ Introduction to Plastics Recycling
In 1981 and 1982, petitioner, Cohen, and Feinberg were
partners in LFC. In 1981, Feinberg approached petitioner about
SAB Resource Recycling Associates (SAB Resource), a limited
partnership structured substantially like SAB Foam. Petitioner
explained to Feinberg his alleged familiarity with PI and
suggested Miller as a resource for more information. He then
talked with Miller about the transaction. Miller reminded
petitioner of his experience with PI but never specifically
discussed the value of the machines with petitioner. Instead,
Miller stated to petitioner that valuations were done on the
recyclers and that as to the people who did the valuations, “he
knew them, they were qualified, they appeared to be qualified”.
Petitioner next sought the advice of his friend Dooskin.
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