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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, research, and investigation, and were
subsequently rejected and discredited by their author. Indeed,
in one preliminary report, Carmagnola states that he has "a
serious concern of actual profit" from 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.
Respondent rejected the Carmagnola 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
petitioners' returns. Not surprisingly, petitioners did not call
Carmagnola to testify in these cases, but preferred instead to
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