Albert R. and Phyllis F. Dworkin - Page 24

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                  In petitioners' case, there was no argument made and no                                  
            evidence presented to the Court to prove that disallowance and                                 
            concession of the investment tax credits related to anything                                   
            other than a valuation overstatement.  To the contrary,                                        
            petitioners stipulated substantially the same facts concerning                                 
            the underlying transactions as we found in Provizer v.                                         
            Commissioner, T.C. Memo. 1992-177.  In the Provizer case, we held                              
            that the taxpayers were liable for the section 6659 addition to                                
            tax because the underpayment of taxes was directly related to the                              
            overvaluation of the Sentinel EPE recyclers.  The overvaluation                                
            of the recyclers, exceeding 2325 percent, was an integral part of                              
            our findings in Provizer that the transaction was a sham and                                   
            lacked economic substance.  Similarly, the record in this case                                 
            plainly shows that the overvaluation of the recyclers is integral                              
            to and is the core of our holding that the underlying transaction                              
            here was a sham and lacked economic substance.                                                 
                  Consistent with our findings in Provizer, petitioners                                    
            stipulated that the Northeast partnership had no net equity                                    
            value, that Northeast's sole activity lacked any potential for                                 
            profit, and that the Northeast 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                              

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