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petitioners' testimony, we hold that the Empire transaction was a
sham and lacked economic substance. In reaching this conclusion,
we rely heavily upon the overvaluation of the Sentinel EPE
recyclers. Respondent is sustained on the question of the
underlying deficiency. We note that petitioners have explicitly
conceded this issue in stipulations of settled issues filed
shortly before trial. The record plainly supports respondent's
determination regardless of such concessions. For a detailed
discussion of the facts and the applicable law in a substantially
identical case, see Provizer v. Commissioner, supra.
Issue 1. Sec. 6653(a) Negligence
In the notice of deficiency in docket No. 36202-86,
respondent determined that petitioners Black were liable for the
negligence additions to tax under section 6653(a)(1) and (2) for
1981. Petitioners Black have the burden of proving that
respondent's determination is erroneous. Rule 142(a); Luman v.
Commissioner, 79 T.C. 846, 860-861 (1982). In an amendment to
answer, respondent asserted that petitioners Bennett were liable
for the negligence additions to tax under section 6653(a)(1) and
(2) for 1981, and under section 6653(a) for 1978 and 1979.
Because these additions to tax were raised for the first time in
respondent's amendment to answer, respondent bears the burden of
proof on this issue. Rule 142(a); Vecchio v. Commissioner, 103
T.C. 170, 196 (1994).
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