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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
ENTIRETY.
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.
OPINION
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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