- 61 -
According to petitioners, the tax benefits were disallowed
because the Partnership transactions lacked economic substance,
not because of any valuation overstatements. It follows,
petitioners reason, that because the "attributable to" language
of section 6659 requires a direct causative relationship between
a valuation overstatement and an underpayment in tax, section
6659 cannot apply to their deficiencies. Petitioners cite in
support of this argument: Todd v. Commissioner, supra; Heasley
v. Commissioner, 902 F.2d 380 (5th Cir. 1990), revg. T.C. Memo.
1988-408; Gainer v. Commissioner, 893 F.2d 225 (9th Cir. 1990),
affg. T.C. Memo. 1988-416; McCrary v. Commissioner, supra.
Petitioners' argument rests on the mistaken premise that our
holding that the Partnership transactions lacked economic
substance was separate and independent from the overvaluation of
the Sentinel EPE recyclers. To the contrary, in holding that the
Partnership transactions lacked economic substance, we relied
heavily upon the overvaluation of the recyclers. Overvaluation
of the recyclers was an integral factor in regard to: (1) The
disallowed tax credits and other benefits in these cases; (2) the
underpayments of tax; and (3) our finding that the Partnership
transactions lacked economic substance.
Petitioners argue that in Provizer v. Commissioner, T.C.
Memo. 1992-177, we found that the Clearwater transaction lacked
economic substance for reasons independent of the valuation
Page: Previous 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 NextLast modified: May 25, 2011