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(3) upheld the additions to tax for negligence under section
6653(a)(1) and (2); (4) upheld the addition to tax for valuation
overstatement under section 6659 because the underpayment of
taxes was directly related to the overvaluation of the Sentinel
EPE recyclers; and (5) held that losses and credits claimed with
respect to the Clearwater Group partnership were attributable to
tax-motivated transactions within the meaning of section 6621(c).
In reaching the conclusion that the transaction lacked business
purpose, this Court relied heavily upon the overvaluation of the
Sentinel EPE recyclers.
Although petitioner has not agreed to be bound by Provizer
v. Commissioner, supra, petitioner has stipulated that his
purchase of the Sentinel EPE and EPS recyclers is similar to the
acquisition of the Sentinel EPE and EPS recyclers described in
Provizer. The underlying transactions in the present cases, as
well as the Sentinel EPE recycler in the present cases, represent
the same type of transaction and same type of machine considered
in Provizer. Set against this background, we consider whether
petitioner is liable for the accuracy-related penalties for 1989
and 1990.
Section 6662(a) imposes an addition to tax equal to 20
percent of the underpayment of tax attributable to, inter alia,
(1) Negligence or disregard of rules or regulations, or (2) any
substantial understatement of income tax, or (3) any substantial
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