- 68 -
Commissioner, 87 T.C. 970, 978-979 (1986); Donahue v.
Commissioner, T.C. Memo. 1991-181, affd. without published
opinion 959 F.2d 234 (6th Cir. 1992), affd. sub nom. Pasternak v.
Commissioner, 990 F.2d 893 (6th Cir. 1993).
Petitioners' reliance on Gainer v. Commissioner, supra, Todd
v. Commissioner, 862 F.2d 540 (5th Cir. 1988), and McCrary v.
Commissioner, supra, is misplaced. In those cases, in contrast
to the consolidated cases herein, it was found that a valuation
overstatement did not contribute to an underpayment of taxes. In
the Todd and Gainer cases, the underpayments were due exclusively
to the fact that the property in each case had not been placed in
service. In the McCrary case, the underpayments were deemed to
result from a concession that the agreement at issue was a
license and not a lease. Although property was overvalued in
each of those cases, the overvaluations were not the ground on
which the taxpayers' liability was sustained. In contrast, "a
different situation exists where a valuation overstatement * * *
is an integral part of or is inseparable from the ground found
for disallowance of an item." McCrary v. Commissioner, 92 T.C.
at 859. Each of these consolidated cases presents just such a
"different situation": overvaluation of the recyclers was
integral to and inseparable from petitioners' claimed tax
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