Bruce and Lois Zenkel, et al. - Page 72

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          claimed tax benefits, in and of themselves, did not preclude                
          imposition of the section 6659 additions to tax.  In McCrary v.             
          Commissioner, supra, the section 6659 addition to tax was                   
          disallowed because the agreement at issue was conceded to be a              
          license and not a lease.  In contrast, the records in                       
          petitioners' cases plainly show that petitioners' underpayments             
          were attributable to overvaluation of the Sentinel EPE recyclers.           
          We hold that petitioners' reliance on McCrary v. Commissioner,              
          supra, is inappropriate.7                                                   
               We held in Provizer v. Commissioner, supra, that each                  
          Sentinel EPE recycler had a fair market value not in excess of              
          $50,000.  Our finding in the Provizer case that the Sentinel EPE            
          recyclers had been overvalued was integral to and inseparable               
          from our holding of a lack of economic substance.  Petitioners              
          stipulated that the Partnership transactions were similar to the            
          Clearwater transaction described in the Provizer case, and that             
          the fair market value of a Sentinel EPE recycler in 1981 and 1982           
          was not in excess of $50,000.  Given those concessions, and the             



          7         Petitioners' citation of Heasley v. Commissioner,                 
          supra, in support of the concession argument is also                        
          inappropriate.  That case was not decided by the Court of Appeals           
          for the Fifth Circuit on the basis of a concession.  Moreover,              
          see supra note 6, to the effect that the Court of Appeals for the           
          Second Circuit and this Court have not followed the Heasley                 
          opinion with respect to the application of sec. 6659.                       






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