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In Provizer v. Commissioner, T.C. Memo. 1992-177, a test
case for the Plastics Recycling group of cases, this Court (1)
found that each Sentinel EPE recycler had a fair market value not
in excess of $50,000, (2) held that the transaction, which is
almost identical to the Partnership transactions in these
consolidated cases, was a sham because it lacked economic
substance and a business purpose, (3) upheld the section 6659
addition to tax for valuation overstatement since the
underpayment of taxes was directly related to the overstatement
of the value of the Sentinel EPE recyclers, and (4) held that
losses and credits claimed with respect to Clearwater were
attributable to tax-motivated transactions within the meaning of
section 6621(c). In reaching the conclusion that the transaction
lacked economic substance and a business purpose, this Court
relied heavily upon the overvaluation of the Sentinel EPE
recyclers.
Although petitioners have not agreed to be bound by the
Provizer opinion, they have stipulated that the investments in
2(...continued)2
accept a beneficial settlement because of exceptional
circumstances. In Farrell v. Commissioner, supra, we rejected
taxpayers' claim to a similar belated settlement arrangement
since the circumstances were different and taxpayers previously
had rejected settlement and elected to litigate the case. See
also Baratelli v. Commissioner, supra; Zenkel v. Commissioner,
T.C. Memo. 1996-398.
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