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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 evidence
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