The rising tide of inflation and low-interest loans during the 1970s managed to lift the limited partnership tax-shelter business into an elite position in the investment world. At top brokerage firms, real estate syndicators and oil and gas sponsors roamed the country with lavish expense accounts assembling properties, while brokers pushed out investment products to an ever-expanding market.
Investors had found they could get a better than respectable return and avoid the tax collector. As oil prices rose 1,000 percent from 1973 to 1980, the average oil fund became a fairly impressive performer. According to the Stanger Report the ''average after-tax rates of return were in the 10 percent to 14 percent range'' for oil and gas drilling partnerships. The Dow Jones industrial average would have netted investors 6.8 percent compounded with reinvested dividends.
But with inflation now halted - or at least in abeyance - investors have turned more tentative about their commitment to limited partnerships. Oil and gas drilling partnerships fell 30 percent in the past year.
Laurence Rossback, vice-president for tax-advantaged investment at Drexel Burnham Lambert Inc., says: ''People with a well drilled in 1981 expected to get still be profitable, investors are disappointed.
Despite such discouraging recent events, however, packagers, promoters, and brokers, as well as more neutral professionals like accountants and tax lawyers, are surprisingly optimistic about the prospects for limited partnerships in 1983 . While no consensus emerges, experts predict the limited partnership field will strengthen slightly.
One staunch optimist is Edward Mendlowitz, partner in the New York accounting firm of Siegel & Mendlowitz. He insists there will be more demand than ever for sheltered limited partnerships next year, and attributes the swelling interest to ''the new tax law's effects next year. The kind of people that would normally have had professional corporations and would have sheltered their income through their pension plan can no longer do that. They have to seek new methods.'' Mr. Mendlowitz says he thinks they will be actively investing in shelters next year.
Furthermore, he argues, more stringent IRS scrutiny of tax shelter promoters and unallowable costs will ultimately give prospective investors more confidence.
But for everyone drawn into the limited partnership field by the tax law, there will be others who shy away. Since tax rates are being reduced, fewer people may require shelters. And the revamped alternative minimun tax may scare some investors away.
Ranking the various types of shelters as to economic appeal is a knotty problem.
Take real estate: While some observers like Arnold Rudoff, the California-based publisher of the Limited Partner Letter, indicates that much of the office market is overbuilt, a counterargument is put forth by Stephen Blank, vice-president and real estate syndicator at Kidder, Peabody & Co. Mr. Blank insists: ''Each deal must be analyzed on its own merits. Investors must investigate the local market. While some areas are overbuilt, some are are still very attractive. And some areas within a specific city may be great and others rotten.''
Mr. Rudoff warns investors to steer clear of partnerships formed to construct commercial properties. But he indicates that some partnerships will be able to buy up commercial real estate at bargain prices as developers are forced to unload. If held for long enough, such properties could produce enticing returns.
William Brennan, the Valley Forge, Pa.-based publisher of the Brennan Report, another newsletter in the tax-shelter field, advises investors who are considering real estate shelters next year to look for ones with diversified portfolios. While the office market is soft, he believes the outlook is good for apartment dwellings. Adds Mr. Blank, with some exaggeration: ''There are none being built; occupancy is nearly 100 percent and rents have gone up substantially recently.''
In the case of Section 7 tax shelters - those that build government subsidized housing for the poor and elderly - Mr. Brennan expects a sharp decrease in availability because of government budget cuts.
Real estate's hottest area in 1983, the experts agree, will be a relative newcomer to the area: rehabilitation projects. Already active in 1982, rehabs - the remodeling of aging buildings - allow investors to get an attractive tax credit after holding a property only five years. Warnings abound here, too, however.
''Very popular will mean a lot of people will lose a lot of money,'' Mr. Blank notes. ''Not every city can afford a Faneuil Hall. Everyone wants to do one of these - it is a 'more the merrier' situation. And as soon as you get a lot of people chasing a certain area you have trouble.''
In the oil and gas area, the most popular type of partnership, there is a general agreement that certain types of shelters will be very attractive economically, despite the current murky picture for oil prices. Drexel Burnham's Mr. Rossbach admits: ''The economics have not been good for two to three years.'' But, he points out, ''The day rates (for drilling) are coming down; leasing costs are down; the price for buying reserves is advantageous.''
Bradley McCurtain, a broker at Boston Bay Capital, who specializes in tax shelters, agrees: ''Drilling costs are way down and oil prices hardly fell. Drilling programs should be a very economical prospect over the next six months.'' For the long-term investor, the strong possibility that oil and gas prices will rise sharply toward the end of the decade may also be alluring.
As always, selectivity is urged. Brennan prefers oil and gas development programs to exploratory or income programs. ''The risks are lower and the opportunity for profit is higher,'' he maintains.
Rudoff warns he has been seeing a lot of money go into oil income funds recently - ''too much.'' He believes there may not be enough good product around.
The two remaining categories of limited partnership with a modicum of popularity are equipment leasing - computers, aircraft, etc. - and research and development partnerships. Rudoff says he expects the R&D category to maintain its fascination for the investor over the next year, but he is not gung-ho about the economic viability. They have only been available since 1978, not long enough to show any consistent track record or trends, and Rudoff wonders whether there will be many that ever work out. ''People are still interested in them because they have not visibly gone through a down cycle,'' he surmises. Brennan adds that the new minimum tax law's effect on R&D shelters may also make them somewhat less attractive.
In the equipment leasing area, not much praise emerges. ''It's almost entirely dependent on how long the equipment holds its value,'' Brennan warns. And ''there is no guarantee your equipment will be leased, either,'' he says, citing the partnerships that own boxcars and barges that are out of commission.
And as far as the unusual shelters - the movie deals, cable deals, and oddities like jojoba bean farms - they will remain available to the high-rolling investor. But, Brennan says, ''These are only for people who already have enough oil and gas and real estate partnerships and want further diversification.'' And high risk.