Bruce and Lois Zenkel, et al. - Page 28

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               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 Clearwater 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.                                                                  
               Although petitioners have not agreed to be bound by the                
          Provizer opinion, they have stipulated that the investments in              
          the Sentinel EPE recyclers in these cases are similar to the                
          investment described in Provizer v. Commissioner, supra.  The               

          3(...continued)                                                             
          circumstances.  In Farrell v. Commissioner, supra, we rejected              
          taxpayers' claim to a similar belated settlement arrangement                
          since the circumstances were different and taxpayers previously             
          had rejected settlement and elected to litigate the case.  See              
          also Baratelli v. Commissioner, supra.                                      
                                                                                     





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