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In the present cases, no argument was made and no evidence
was presented to the Court to prove that disallowance and
concession of the investment tax credits related to anything
other than a valuation overstatement. To the contrary,
petitioners stipulated substantially the same facts concerning
the underlying transactions as we found in Provizer v.
Commissioner, T.C. Memo. 1992-177. In the Provizer case, we held
that the taxpayers were liable for the section 6659 addition to
tax because the underpayment of taxes was directly related to the
overvaluation of the Sentinel EPE recyclers. The overvaluation
of the recyclers, exceeding 2325 percent, was an integral part of
our findings in Provizer that the transaction was a sham and
lacked economic substance. Similarly, the records in these cases
plainly show that the overvaluation of the recyclers is integral
to and is the core of our holding that the underlying
transactions here were shams and lacked economic substance.
Consistent with our findings in Provizer, petitioners
respectively stipulated that the Northeast and Hyannis
transactions had no net equity value, that the sole activity of
the Northeast and Hyannis partnerships lacked any potential for
profit, and that the Northeast and Hyannis partnership
transactions therefore lacked economic substance. When a
transaction lacks economic substance, section 6659 will apply
because the correct basis is zero, and any basis claimed in
excess of that is a valuation overstatement. Gilman v.
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