- 67 -
Commissioner, supra, the section 6659 addition to tax was
disallowed because the agreement at issue was a license and not a
lease. In contrast, the records in petitioners' cases plainly
show that petitioners' underpayments were attributable to
overvaluation of the Sentinel EPE recyclers. We hold that
petitioners' reliance on McCrary v. Commissioner, supra, is
inappropriate.28
We held in Provizer v. Commissioner, supra, that each
Sentinel EPE recycler had a fair market value not in excess of
$50,000. Our holding in the Provizer case that the Sentinel EPE
recyclers had been overvalued was integral to and inseparable
from our holding of a lack of economic substance. Petitioners
stipulated that the Partnership transactions were similar to the
Clearwater transaction described in the Provizer case, and that
the fair market value of a Sentinel EPE recycler in 1981 and 1982
was not in excess of $50,000. Given those concessions, and the
fact that the records here plainly show that the overvaluation of
the recyclers was the underlying reason for disallowance of the
claimed tax benefits, we conclude that the deficiencies were
attributable to overvaluation of the Sentinel EPE recyclers.
28 Petitioners' reliance on Heasley v. Commissioner, supra, in
support of the concession argument is also inappropriate. That
case was not decided by the Court of Appeals for the Fifth
Circuit on the basis of a concession. Moreover, see supra note
27, to the effect that the Court of Appeals for the Second
Circuit and this Court have not followed the Heasley opinion with
respect to the application of sec. 6659.
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