- 63 -
published opinion 959 F.2d 234 (6th Cir. 1992), affd. sub nom.
Pasternak v. Commissioner, 990 F.2d 893 (6th Cir. 1993)).
Farrell's reliance on Gainer v. Commissioner, supra, McCrary
v. Commissioner, 92 T.C. 827 (1989), and Todd v. Commissioner,
supra, is misplaced. In contrast to the consolidated cases
herein, it was found that a valuation overstatement did not
contribute to an underpayment of taxes in any of the cited cases.
In the Todd and Gainer cases, the underpayments were due
exclusively to the fact that the property in each case had not
been placed in service. In the McCrary case, the underpayments
were deemed to result from a concession that the agreement at
issue was a license and not a lease. Although property was
overvalued in each of those cases, the overvaluations were not
the ground on which the taxpayers' liability was sustained. In
contrast, "a different situation exists where a valuation
overstatement * * * is an integral part of or is inseparable from
the ground found for disallowance of an item." McCrary v.
Commissioner, supra at 859. Each of petitioners' cases present
just such a "different situation": overvaluation of the
recyclers was integral to and inseparable from the claimed tax
benefits and our finding that the Partnership transactions lacked
economic substance.27
27 To the extent that Heasley v. Commissioner, 902 F.2d 380
(5th Cir. 1990), revg. T.C. Memo. 1988-408, merely represents an
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