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basis of these assumptions, the economic projections show a net
cashflow of $2,453,398. The income projections in the PPM are
not discounted to present value.
According to the PPM, depreciation on the EMS was expected
to total $1,478,571 for 1980. This was based on Sav-Fuel’s use
of the Class Life Asset Depreciation Range method to depreciate
the EMS on a double declining basis over 7 years. The PPM also
states that the partnership anticipated approximately $2,070,000
in 1980 for investment tax credits and energy credits.
The PPM states that to the extent that fuel prices do not
continue to increase through 2005 at the rate projected, Sav-Fuel
will be unable to achieve the gross income and return to its
limited partners as set forth in its economic projections. The
PPM also recognizes that the development of new processes or
technology could result in the possible obsolescence of the EMS.
Over 30 of the past 35 years, petitioner has worked as a
stockbroker and investment banker. At the time of his investment
in Sav-Fuel, petitioner had no knowledge of the partnership other
than that obtained from reviewing the PPM. Petitioner has no
personal knowledge of the EMS.
Petitioner and his former wife’s jointly filed 1981 Federal
income tax return was mailed to respondent on March 11, 1983. On
the return, petitioner claimed a deduction of $18,956, his
distributive share of the partnership losses from Sav-Fuel. The
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Last modified: May 25, 2011