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respondent's experts. However, we think that petitioner's
attempt to discredit Grossman's and Lindstrom's findings was
unpersuasive. To the contrary, we found both Grossman and
Lindstrom to be qualified, impressive, and credible experts, and
we rely heavily on their reports and testimony in making our
finding of fact regarding valuation.
We have found as an ultimate fact that the Sentinel EPS
recyclers purchased by petitioner in 1982 did not have a fair
market value at that time in excess of $50,000 per machine. The
purchase price of $1,750,000 per machine is therefore inflated by
35 times its actual value. Having so found, it follows that the
adjusted basis of the Sentinel EPS recycler claimed by petitioner
on his returns is by definition overstated within the meaning of
section 6662(e).
In summary, petitioner overstated the value of his Sentinel
EPE and EPS recyclers within the meaning of section 6662(e).
Further, petitioner failed to present any persuasive evidence,
nor are we able to conclude independently that petitioner acted
with reasonable cause and good faith in valuing his recyclers.
Thus, petitioner is liable for the accuracy-related penalty for
1989.
C. Substantial Understatement of Income Tax
Respondent also determined that petitioner was liable for
the accuracy-related penalty for 1989 because he substantially
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