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1982, failure to establish the fair market value of the recycling
equipment is cited as a reason for disallowing petitioner's
claimed tax benefits. Also, the respective explanations for the
section 6659 additions to tax make clear that the deficiencies
were attributable to valuation overstatements. The notice of
deficiency for 1981 states that "The entire underpayment of your
income tax for * * * 1981 is attributable to a valuation
overstatement in excess of 250 percent under section 6659".
Similarly, the notice of deficiency for 1982 states that "Since
the underpayment of tax is attributable to a valuation
overstatement, you are liable for a penalty under section 6659".
In Provizer v. Commissioner, T.C. Memo. 1992-177, overvaluation
of the Sentinel EPE recyclers was the dominant factor that led us
to hold that the Clearwater transaction lacked economic
substance. Consistent therewith, in holding here that the
Partnership transactions lacked economic substance, we rely
heavily upon the overvaluation of the recyclers. Overvaluation
of the recyclers was an integral factor in regard to: (1) The
disallowed tax credits and other benefits in this case; (2) the
underpayments of tax; and (3) our holding that the Partnership
transactions lacked economic substance.
Petitioner's reliance on Gainer v. Commissioner, supra, and
Todd v. Commissioner, supra, is misplaced. See also McCrary v.
Commissioner, supra. In those cases, in contrast to the present
case, it was found that a valuation overstatement did not
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