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plastics business. Cohn never saw a Sentinel EPE recycler and
never asked to see one. He never visited an end-user. Despite
his many years in the syndication business and his great success
in that business, with respect to the Northeast transaction, Cohn
"did not spend hours and hours pouring over" the offering
memorandum, but simply relied on Kravitz.
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.
The underlying transaction in these cases (the Northeast
transaction) is in all material respects identical to the
transaction considered in the Provizer case. The Sentinel EPE
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