Jeffrey I. and Roberta H. Stone - Page 16

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          consolidated cases herein, raised issues regarding additions to             
          tax for negligence and valuation overstatement.  We have found              
          the taxpayers liable for such additions to tax in all but one of            
          the opinions issued to date.9                                               
               In Provizer v. Commissioner, T.C. Memo. 1992-177, a test               
          case for the Plastics Recycling group of cases, this Court (1)              
          found that each Sentinel EPE recycler had a fair market value not           
          in excess of $50,000, (2) held that the transaction, which is               
          almost identical to the Partnership transactions in these                   
          consolidated cases, was a sham because it lacked economic                   
          substance and a business purpose, (3) upheld the section 6659               
          addition to tax for valuation overstatement since the                       
          underpayment of taxes was directly related to the overstatement             
          of the value of the Sentinel EPE recyclers, and (4) held that               
          losses and credits claimed with respect to the Clearwater                   
          partnership were attributable to tax-motivated transactions                 
          within the meaning of section 6621(c).  In reaching the                     
          conclusion that the transaction lacked economic substance and a             
          business purpose, this Court relied heavily upon the                        
          overvaluation of the Sentinel EPE recyclers.                                

          9    In Zidanich v. Commissioner, T.C. Memo. 1995-382, we found             
          the taxpayers liable for the section 6659 addition to tax, but              
          not liable for the negligence additions to tax under section                
          6653(a).  As indicated in our opinion, the Zidanich case, and the           
          Steinberg case consolidated with it for opinion, involved                   
          exceptional circumstances.                                                  

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