- 21 - integral to and was the core of our holding that the underlying transaction herein was a sham and lacked economic substance. Consistent with our findings in Provizer, petitioners stipulated that the Hyannis partnership had no net equity value, that Hyannis' sole activity lacked any potential for profit, and that the Hyannis transaction therefore lacked economic substance. When a transaction lacks economic substance, section 6659 will apply because the correct basis is zero and any basis claimed in excess of that is a valuation overstatement. Gilman v. Commissioner, supra; Rybak v. Commissioner, 91 T.C. 524, 566-567 (1988); Zirker v. Commissioner, 87 T.C. 970, 978-979 (1986); Donahue v. Commissioner, T.C. Memo. 1991-181, affd. without published opinion 959 F.2d 234 (6th Cir. 1992), affd. sub nom. Pasternak v. Commissioner, 990 F.2d 893 (6th Cir. 1993). We held in Provizer v. Commissioner, T.C. Memo. 1992-177, that each Sentinel EPE recycler had a fair market value not in excess of $50,000. Our finding in the Provizer case that the Sentinel EPE recyclers had been overvalued was integral to and inseparable from our finding of a lack of economic substance. Petitioners conceded that the Hyannis transaction was similar to the Clearwater transaction described in Provizer v. Commissioner, supra, and that the Hyannis transaction lacked economic substance. Given those concessions, and the fact that the record here plainly shows that the overvaluation of the recyclers was the primary reason for the disallowance of the claimed tax benefits, and the fact that no argument was made and no evidencePage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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