- 33 -
point out that the notice of deficiency "merely asserts that the
claimed losses and credits were disallowed because Petitioners
have not established their entitlement thereto." According to
petitioners, "Unless it is clear that the only possible basis for
* * * [their] concession was the existence of a valuation
overstatement, it is impossible to attribute the underpayment
involved herein to a valuation overstatement."
However, we have found herein that the Resource transaction
lacked economic substance due to overvaluation of the recyclers,
notwithstanding petitioners' open-ended concession. This is not
a situation where we have "to decide difficult valuation
questions for no reason other than the application of penalties."
See McCrary v. Commissioner, supra at 854 n.14. The value of the
Sentinel EPE recycler was established in Provizer v.
Commissioner, T.C. Memo. 1992-177, and stipulated by the parties.
As a consequence of the inflated value assigned to the recyclers
by Resource, petitioners claimed a loss deduction and credits
that resulted in an underpayment of tax, and we held that the
Resource transaction lacked economic substance. Regardless of
petitioners' concession, in this case the underpayment of tax was
attributable to the valuation overstatement.
Moreover, concession of tax benefits such as the investment
tax credit in and of itself does not relieve taxpayers of
liability for the section 6659 addition to tax. See Dybsand v.
Commissioner, T.C. Memo. 1994-56; Chiechi v. Commissioner, T.C.
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