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$50,000; (2) held that the transaction, which was virtually
identical to the transaction in the present case, was a sham
because it lacked economic substance and a business purpose; (3)
sustained the additions to tax for negligence under section
6653(a)(1) and (2); (4) sustained the addition to tax for
valuation overstatement under section 6659 because the
underpayment of taxes was directly related to the overvaluation
of the recyclers; and (5) held that the partnership losses and
tax credits claimed with respect to the plastics recycling
partnership at issue were attributable to tax-motivated
transactions within the meaning of section 6621(c). We also
found that other recyclers were commercially available during the
years in issue. Id.
In this case, respondent determined that petitioner is
liable for additions to tax for negligence under section
6653(a)(1) and (2) with respect to underpayments of tax
attributable to petitioner’s investment in Foam. Section
6653(a)(1) imposes an addition to tax equal to 5 percent of the
underpayment if any part of an underpayment of tax is due to
negligence or intentional disregard of rules or regulations. An
additional amount is added to the tax under section 6653(a)(2) in
an amount equal to 50 percent of the interest payable with
respect to the portion of the underpayment attributable to
negligence.
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