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Petitioners argue that their concessions of the deficiencies
preclude imposition of the section 6659 additions to tax.
Petitioners contend that their concessions render any inquiry
into the grounds for such deficiencies moot. Absent such
inquiry, petitioners argue that it cannot be known whether their
underpayments were attributable to a valuation overstatement or
another discrepancy. Without a finding that a valuation
overstatement contributed to an underpayment, according to
petitioners, section 6659 cannot apply. In support of this line
of reasoning, petitioners rely heavily upon Heasley v.
Commissioner, 902 F.2d 380 (5th Cir. 1990) and McCrary v.
Commissioner, supra.
Petitioners' open-ended concessions do not obviate our
finding that the Partnership transactions lacked economic
substance due to overvaluation of the recyclers. This is not a
situation where we have "to decide difficult valuation questions
for no reason other than the application of penalties." See
McCrary v. Commissioner, supra at 854 n.14. The value of the
Sentinel EPE recycler was established in Provizer v.
Commissioner, T.C. Memo. 1992-177, and stipulated by the parties.
As a consequence of the inflated value assigned to the recyclers
by the Partnerships, petitioners claimed deductions and credits
that resulted in underpayments of tax, and we held that the
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