Albert R. and Phyllis F. Dworkin - Page 10

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            asked some New York City attorneys about the New York law firm                                 
            that prepared the draft opinion letter and was satisfied with its                              
            reputation.  The preface to the offering memorandum contained the                              
            following emphasized admonition:  THIS MEMORANDUM AND ATTACHED                                 
            APPENDICES IS AN INTEGRAL DOCUMENT AND MUST BE READ IN ITS                                     
                  Petitioner had no education or work experience in plastics                               
            recycling or plastics materials.  Petitioner did not conduct any                               
            independent research as to the value of the Sentinel EPE                                       
            recyclers.  Petitioner did not contact either Mr. Ulanoff or Mr.                               
            Burstein regarding their evaluation of the recyclers, and did not                              
            contact any other expert on plastics or engineering.                                           
                  In Provizer v. Commissioner, T.C. Memo. 1992-177, a test                                 
            case involving the Clearwater transaction, 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                                 

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