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energy tax credits would be computed would equal the price F&G
paid for the recyclers. The opinion was not signed.
Mr. Cole’s cover letter specifically directed petitioner’s
attention to the section of the POM entitled “Tax Benefits” and
to the Boylan & Evans opinion. The cover letter also informed
petitioner that HGSC had received an additional opinion from
Boylan & Evans on behalf of the limited partners (limited partner
opinion) that would be available upon request after the closing
of the partnership and that Madison’s general partner would
reimburse HGSC for the expense incurred in obtaining the opinion.
Correspondingly, the POM estimated that Madison would use $45,000
of the offering proceeds to reimburse HGSC for legal fees.14
Petitioner read both the cover letter and the POM.
Petitioner did not show the POM to his tax return preparer
because he considered HG&C to be his tax adviser and because HG&C
went over the POM and sought a legal opinion regarding the
investment. Petitioner was aware at that time, however, that
HG&C did not have a background in chemical engineering.
Petitioner was also aware that Mr. Cole was neither a plastics
recycling expert nor a chemical engineering expert and that Mr.
Cole did not have the knowledge required to assess the accuracy
of the financial projections contained in the POM.
14The parties stipulated that HG&C, rather than HGSC, paid
Boylan & Evans $45,000 to obtain the limited partner opinion and
was reimbursed by Madison.
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