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We held in Provizer v. Commissioner, supra, that each
Sentinel EPE recycler had a fair market value not in excess of
$50,000. Our finding in the Provizer case that the Sentinel EPE
recyclers had been overvalued was integral to and inseparable
from our finding of a lack of economic substance. Petitioners
conceded that the Empire transaction was similar to the
Clearwater transaction described in Provizer v. Commissioner,
supra, and that the Empire transaction lacked economic substance.
Given those concessions, and the fact that the records here
plainly show that the overvaluation of the recyclers was the
reason for the disallowance of the tax benefits, and the fact
that no argument was made and no evidence was presented to the
Court to prove that disallowance and concession of the tax
benefits related to anything other than a valuation
overstatement, we conclude that the deficiencies caused by the
disallowance of the claimed tax benefits were attributable to the
overvaluation of the Sentinel EPE recyclers.
Finally, we consider petitioners' express argument as to
waiver of the penalty. On brief, petitioners each contested
imposition of the section 6659 addition to tax on the grounds
that respondent erroneously failed to waive the addition to tax.
Section 6659(e) authorizes respondent to waive all or part of the
addition to tax for valuation overstatements if taxpayers
establish that there was a reasonable basis for the adjusted
bases or valuations claimed on the returns and that such claims
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