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We held in Provizer v. Commissioner, supra, that each
Sentinel EPE recycler had a fair market value not in excess of
$50,000. Our finding in the Provizer case that the Sentinel EPE
recyclers had been overvalued was integral to and inseparable
from our holding of a lack of economic substance. Petitioners
stipulated that the Resource transaction was similar to the
Clearwater transaction described in the Provizer case, and that
the fair market value of a Sentinel EPE recycler in 1981 was not
in excess of $50,000. Given those concessions, and the fact that
the record here plainly shows that the overvaluation of the
recyclers was the only reason for the disallowance of the claimed
tax benefits, we conclude that respondent has satisfied the
burden of showing that the deficiency was attributable to
overvaluation of the Sentinel EPE recyclers.
2. Section 6659(e)
Petitioners alternatively argue that respondent erroneously
failed to waive the section 6659 addition to tax. Section
6659(e) authorizes the Commissioner to waive all or part of the
addition to tax for valuation overstatement if taxpayers
establish that there was a reasonable basis for the adjusted
bases or valuations claimed on the returns and that such claims
were made in good faith. Respondent's refusal to waive a section
6659 addition to tax is reviewable by this Court for abuse of
discretion. Krause v. Commissioner, 99 T.C. at 179. Abuse of
discretion has been found in situations where the Commissioner's
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