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the same facts concerning the underlying transactions as we found
in Provizer v. Commissioner, T.C. Memo. 1992-177. In the
Provizer case, we held that the taxpayers were liable for the
section 6659 addition to tax because the underpayment of taxes
was directly related to the overvaluation of the Sentinel EPE
recyclers. The overvaluation of the recyclers, exceeding 2325
percent, was an integral part of our findings in Provizer that
the transaction was a sham and lacked economic substance.
Similarly, the records in these cases plainly show that the
overvaluation of the recyclers is integral to and is the core of
our holding that the underlying transactions here are shams and
lack economic substance. When a transaction lacks economic
substance, section 6659 will apply because the correct basis is
zero, and any basis claimed in excess of that is a valuation
overstatement. Gilman v. Commissioner, supra; Rybak v.
Commissioner, 91 T.C. 524, 566-567 (1988); Zirker v.
Commissioner, 87 T.C. 970, 978-979 (1986); Donahue v.
Commissioner, T.C. Memo. 1991-181, affd. without published
opinion 959 F.2d 234 (6th Cir. 1992), affd. sub nom. Pasternak v.
Commissioner, 990 F.2d 893 (6th Cir. 1993).
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
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