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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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