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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
transaction lacked economic substance and a business purpose,
this Court relied heavily upon the overvaluation of the Sentinel
EPE recyclers.
Although petitioner has not agreed to be bound by the
Provizer opinion, he has stipulated that his investment in the
Sentinel EPE recyclers was similar to the investment described in
Provizer, and, pursuant to his request, we have taken judicial
notice of our opinion in the Provizer case. Petitioner invested
in EI, a tier partnership that invested in Clearwater. The
underlying transaction in this case (the Clearwater transaction),
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