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reported in that case. According to petitioners, the purported
value of the recyclers in the Clearwater transaction was
predicated upon a projected stream of royalty income, and this
Court merely rejected the taxpayers' valuation method.
Petitioners misread and distort our Provizer opinion. In the
Provizer case, overvaluation of the Sentinel EPE recyclers,
irrespective of the technique employed by the taxpayers in their
efforts to justify the overvaluation, was the dominant factor
that led us to hold that the Clearwater transaction lacked
economic substance. Likewise, overvaluation of the Sentinel EPE
recyclers in these cases is the ground for our holding herein
that the Partnership transactions lacked economic substance.
Moreover, a virtually identical argument was recently
rejected in Gilman v. Commissioner, supra, by the Court of
Appeals for the Second Circuit. In the Gilman case, the
taxpayers engaged in a computer equipment sale and leaseback
transaction that this Court held was a sham transaction lacking
economic substance. The taxpayers therein, citing Todd v.
Commissioner, supra, and Heasley v. Commissioner, supra, argued
that their underpayment of taxes derived from nonrecognition of
the transaction for lack of economic substance, independent of
any overvaluation. The Court of Appeals for the Second Circuit
sustained imposition of the section 6659 addition to tax because
overvaluation of the computer equipment contributed directly to
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