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credits to 1979, 1980, and 1981 in the amounts of $15,738,
$22,950, and $12,645, respectively.
In the notice of deficiency, respondent disallowed all items
of income, loss, deductions, and credits related to Sunbelt, and
increased petitioners' income accordingly for 1982. Respondent
also disallowed the investment tax credit carry backs for 1979,
1980, and 1981, and allowed an investment tax credit of $1,230
for 1982. In addition, respondent determined that, for each
year, petitioners were liable for the additions to tax under
section 6653 for negligence, section 6659 for valuation
overstatement, and section 6621(c) for increased interest. As
previously noted, petitioners now dispute only respondent's
determinations relating to the imposition of the addition to tax
for negligence.
Petitioners have stipulated substantially the same facts
concerning the underlying transactions as we found in Provizer v.
Commissioner, T.C. Memo. 1992-177, with the exception of certain
facts concerning the Provizers, the expert opinions, and other
matters that we consider of minimal significance. Those facts
may be summarized as follows. In 1981, PI manufactured and sold
six Sentinel EPE Recyclers to ECI Corp. for $981,000 each. ECI
Corp., in turn, resold the recyclers to F&G Corp. for $1,162,666
each. F&G Corp. then leased the recyclers to Clearwater, which
licensed the recyclers to FMEC Corp., which sublicensed them back
to PI. The sales of the recyclers from PI to ECI Corp. were
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