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tax because the underpayment of taxes was directly related to the
overvaluation of the Sentinel EPE recyclers. The overvaluation
of the recyclers, exceeding 2325 percent, was an integral part of
our findings in Provizer that the transaction was a sham and
lacked economic substance. Similarly, the records in these cases
plainly show that the overvaluation of the recyclers is integral
to and is the core of our holding that the underlying
transactions here were shams and lacked economic substance.
Consistent with our findings in Provizer, petitioners
respectively stipulated that the Scarborough and Plymouth
transactions had no net equity value, that the sole activity of
the Scarborough and Plymouth partnerships lacked any potential
for profit, and that the Scarborough and Plymouth partnership
transactions therefore lacked economic substance. When a
transaction lacks economic substance, section 6659 will apply
because the correct basis is zero and any basis claimed in excess
of that is a valuation overstatement. Gilman v. Commissioner,
supra; Rybak v. Commissioner, 91 T.C. 524, 566-567 (1988); Zirker
v. Commissioner, 87 T.C. 970, 978-979 (1986); Donahue v.
Commissioner, T.C. Memo. 1991-181, affd. without published
opinion 959 F.2d 234 (6th Cir. 1992), affd. sub nom. Pasternak v.
Commissioner, 990 F.2d 893 (6th Cir. 1993).
We held in Provizer v. Commissioner, supra, that each
Sentinel EPE recycler had a fair market value not in excess of
$50,000. Our finding in the Provizer case that the Sentinel EPE
recyclers had been overvalued was integral to and inseparable
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