- 35 -
to and is the core of our holding that the Resource transaction
was a sham and lacked economic substance.
Petitioners' reliance on McCrary v. Commissioner, 92 T.C. at
827, and Rogers v. Commissioner, T.C. Memo. 1990-619, is
misplaced. In the McCrary case, the taxpayers conceded
disentitlement to their claimed tax benefits and the section 6659
addition to tax was held inapplicable. However, the taxpayers'
concession of the claimed tax benefits, in and of itself, did not
preclude imposition of the section 6659 addition to tax. Rather,
the section 6659 addition to tax was disallowed because the
agreement at issue was conceded to be a license and not a lease.
In the Rogers case, this Court rejected the section 6659 addition
to tax because we had "not found that the credits were disallowed
due to an overvaluation". In contrast, the record in this case
plainly shows, and we have so held, that petitioners'
underpayment was attributable to overvaluation of the Sentinel
EPE recyclers. We consider petitioners' reliance on McCrary v.
Commissioner, supra, and Rogers v. Commissioner, supra, to be
inappropriate.3
3 Petitioners' citation of Heasley v. Commissioner, 902 F.2d
380 (5th Cir. 1990), revg. T.C. Memo. 1988-408, 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, 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. See Gilman
v. Commissioner, 933 F.2d 143, 151 (2d Cir. 1991), affg. T.C.
Memo. 1989-684.
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