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shareholder in F & G. Grant and Roberts have been general
partners together in other investments. The Hyannis offering
memorandum disclosed that Roberts and Grant could each be deemed
promoters of Hyannis and that Miller represented Grant. Roberts
mailed petitioner a copy of the Hyannis offering memorandum.
Petitioner reviewed the offering memorandum and directed his
questions to Roberts. Based on the information provided by these
sources, and his personal judgment, petitioner invested in
Hyannis.
Petitioners do not have any education or work experience in
plastics recycling or plastics materials. Petitioner did not
investigate PI. Petitioners did not see a Sentinel recycler
before investing in Hyannis.
OPINION
In Provizer v. Commissioner, T.C. Memo. 1992-177, a test
case involving the Clearwater transaction and another tier
partnership, this Court (1) found that each Sentinel EPE recycler
had a fair market value not in excess of $50,000, (2) held that
the Clearwater transaction was a sham because it lacked economic
substance and a business purpose, (3) upheld the section 6659
addition to tax for valuation overstatement since the
underpayment of taxes was directly related to the overstatement
of the value of the Sentinel EPE recyclers, and (4) held that
losses and credits claimed with respect to Clearwater were
attributable to tax-motivated transactions within the meaning of
section 6621(c). In reaching the conclusion that the Clearwater
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