- 27 -
position, petitioners submitted into evidence preliminary reports
prepared for respondent by Ernest D. Carmagnola (Carmagnola), the
president of Professional Plastic Associates. Carmagnola had
been retained by the IRS in 1984 to evaluate the Sentinel EPE and
EPS recyclers in light of what he described as "the fantastic
values placed on the [recyclers] by the owners." Based on
limited information available to him at that time, Carmagnola
preliminarily estimated that the value of the Sentinel EPE
recycler was $250,000. However, after additional information
became available to him, Carmagnola concluded in a signed
affidavit, dated March 16, 1993, that the machines actually had a
fair market value of not more than $50,000 each in the fall of
1981 and 1982.
We accord no weight to the Carmagnola reports submitted by
petitioners. The projected valuations therein were based on
inadequate information,12 research, and investigation, and were
subsequently rejected and discredited by their author.
Respondent likewise rejected the reports and considered them
unsatisfactory for any purpose, and there is no indication in the
records that respondent used them as a basis for any
12 In one preliminary report, Carmagnola states that he has "a
serious concern of actual profit-level" of a Sentinel EPE
recycler and that to determine whether the machines actually
could be profitable, he required additional information from PI.
Carmagnola also indicates that in preparing the report, he did
not have information available concerning research and
development costs of the machines and that he estimated those
costs in his valuations of the machines.
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011