Malcolm I. Lewin and Trina Lewin - Page 25

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          reasonably prudent person would have asked a qualified adviser              
          whether such a windfall were not “too good to be true.”  See                
          McCrary v. Commissioner, 92 T.C. 827, 850 (1989).                           
               The memorandum included numerous caveats and warnings                  
          regarding the business and tax risks of SAB Foam.  It stated that           
          the offering involved a high degree of risk and that each offeree           
          should consult his own professional advisers as to legal, tax,              
          accounting, and other matters relating to any purchase of any               
          units in the partnership.  A careful consideration of the                   
          memorandum, and the discussion of high writeoffs and risk of                
          audit, would have alerted a prudent investor to question the                
          nature of the promised tax benefits.                                        
               Moreover, the tax opinion made clear that there was no                 
          independent evaluation of the SAB Foam transactions.  The opinion           
          indicated that Boylan & Evans relied on the statements of the               
          general partner and “other statements of fact and opinion                   
          furnished to us by persons familiar with the transaction                    
          described in the Memorandum.”  Boylan & Evans clearly based its             
          conclusion about the fair market value of the recyclers 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 SAB Foam transactions and the             
          enormous price paid for the recyclers (largely with nonrecourse             
          notes exchanged in a plainly circular transaction), petitioners             

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