- 23 -
is disallowed or conceded. See Irom v. Commissioner, 866 F.2d
545, 547 (2d Cir. 1989), vacating in part and remanding T.C.
Memo. 1988-211; Harness v. Commissioner, supra.
In petitioners' cases, no arguments were made and no
evidence was presented to the Court to prove that disallowance
and concession of the investment tax credits related to anything
other than valuation overstatements. To the contrary,
petitioners stipulated substantially the same facts concerning
the underlying transactions as we found in Provizer v.
Commissioner, supra. 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 records in these cases
plainly show that the overvaluation of the recyclers is integral
to and is the core of our holding that the underlying transaction
in these cases was a sham and 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
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