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transaction lacked economic substance and a business purpose,
this Court relied heavily upon the overvaluation of the Sentinel
EPE recyclers.
The underlying transaction in this case (the Hyannis
transaction) is in all material respects identical to the
transaction considered in the Provizer case. The Sentinel EPE
recyclers considered in this case are the same type of machines
considered in the Provizer case.
Based on the entire record in this case, including the
extensive stipulations, testimony of respondent's experts, and
petitioner's testimony, we hold that the Hyannis transaction was
a sham and lacked economic substance. In reaching this
conclusion, we rely heavily upon the overvaluation of the
Sentinel EPE recyclers. Respondent is sustained on the question
of the underlying deficiency. We note that petitioner has
conceded this issue in a Stipulation of Settled Issues filed
shortly before trial. The record plainly supports respondent's
determination regardless of this concession. For a detailed
discussion of the facts and the applicable law in a substantially
identical case, see Provizer v. Commissioner, supra.
Issue 1. Sec. 6653(a) Negligence
Respondent determined that petitioners were liable for the
additions to tax under section 6653(a)(1) and (2). Petitioners
have the burden of proving that respondent's determination of an
addition to tax is erroneous. Rule 142(a); Luman v.
Commissioner, 79 T.C. 846, 860-861 (1982).
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