Robert D. and Patricia K. Kaliban, et al. - Page 5

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                  2.  The underpayments in income tax attributable to                                 
                  petitioners' participation in the Plastics Recycling                                
                  Program are substantial underpayments attributable to                               
                  tax motivated transactions, subject to the increased                                
                  rate of interest established under I.R.C. �6621(c),                                 
                  formerly �6621(d).                                                                  

                  3.  This stipulation resolves all issues that relate to                             
                  the items claimed on petitioners' tax returns resulting                             
                  from their participation in the Plastics Recycling                                  
                  Program, with the exception of petitioners' potential                               
                  liability for additions to the tax for valuation                                    
                  overstatements under I.R.C. �6659 and for negligence                                
                  under the applicable provisions of �6653(a).                                        
                  4.  With respect to the issue of the addition to the                                
                  tax under I.R.C. �6659, the petitioners do not intend                               
                  to contest the value of the Sentinel Recycler or the                                
                  existence of a valuation overstatement on the                                       
                  Petitioners' returns; however, Petitioners reserve                                  
                  their right to argue that the underpayment in tax is                                
                  not attributable to a valuation overstatement within                                
                  the meaning of I.R.C. �6659(a)(1), and that the                                     
                  Secretary should have waived the addition to tax                                    
                  pursuant to the provisions of I.R.C. �6659(e).                                      
                  Long after the trials of these cases, in each case                                  
            petitioners filed a Motion For Leave To File Motion For Decision                          
            Ordering Relief From the Negligence Penalty and the Penalty Rate                          
            of Interest and To File Supporting Memorandum of Law under Rule                           
            50.  These motions were filed with attached exhibits in October                           
            and November of 1995.  Petitioners concurrently lodged with the                           
            Court motions for decision ordering relief from the additions to                          
            tax for negligence and the increased rate of interest, with                               
            attachments and memoranda in support of the motions.                                      
            Subsequently, respondent filed objections, with attachments and                           
            memoranda in support thereof, and petitioners thereafter filed                            

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