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that the value of the Sentinel EPE recycler was $250,000.
However, after additional information became available to him,
Carmagnola concluded in a signed affidavit, dated March 16, 1993,
that the machines actually had a fair market value of not more
than $50,000 each in the fall of 1981.
We accord no weight to the Carmagnola reports submitted by
petitioners. The projected valuations therein were based on
inadequate information, research, and investigation, and were
subsequently rejected and discredited by their author. In one
preliminary report, Carmagnola states that he has "a serious
concern of actual profit" of a Sentinel EPE recycler and that to
determine whether the machines actually could be profitable, he
required additional information from PI. Carmagnola also
indicates that in preparing the report, he did not have
information available concerning research and development costs
of the machines and that he estimated those costs in his
valuations of the machines.
Respondent rejected the Carmagnola reports and considered
them unsatisfactory for any purpose, and there is no indication
in the record that respondent used them as a basis for any
determinations in the notice of deficiency. Even so, counsel for
petitioners obtained copies of these reports and urge that they
support the reasonableness of the value reported on petitioners'
1981 return. Not surprisingly, said counsel did not call
Carmagnola to testify in this case but preferred instead to rely
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