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the Sentinel EPE and EPS recyclers in light of what he described
as "the fantastic values placed on the [recyclers] by the
owners." Based on limited information available to him at that
time, Carmagnola preliminarily estimated the value of the
Sentinel EPE recycler to be $250,000. However, after additional
information became available to him, Carmagnola concluded in a
signed affidavit, dated March 16, 1993, that the machines
actually had a fair market value of not more than $50,000 each in
the fall of 1981 and 1982.
We accord no weight to the Carmagnola reports submitted by
petitioners. The projected valuations therein were based on
inadequate information,6 research, and investigation, and were
subsequently rejected and discredited by their author.
Respondent likewise rejected the reports and considered them
unsatisfactory for any purpose; and there is no indication in the
records that respondent used them as a basis for any
determinations in the notices of deficiency. Even so,
petitioners' counsel obtained copies of these reports and urge
that they support the reasonableness of the values reported on
their returns. Not surprisingly, petitioners did not call
6 In one preliminary report, Carmagnola states that he has "a
serious concern of actual profit-level" of a Sentinel EPE
recycler and that to determine whether the machines actually
could be profitable, he required additional information from PI.
Carmagnola also indicates that in preparing the report, he did
not have information available concerning research and
development costs of the machines and that he estimated those
costs in his valuations of the machines.
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