- 63 -
the claimed tax benefits, in and of itself, did not preclude
imposition of the section 6659 addition to tax. In McCrary v.
Commissioner, supra, the section 6659 addition to tax was
disallowed because the agreement at issue was conceded to be a
license and not a lease. In contrast, the records in
petitioners' cases plainly show that petitioners' underpayments
were attributable to overvaluation of the Sentinel EPE recyclers.
We hold that petitioners' reliance on McCrary v. Commissioner,
supra, is inappropriate.20
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 Provizer 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 Partnership transactions were 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
records here plainly show that the overvaluations of the
20 Petitioners' citation of Heasley v. Commissioner, supra, 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, see supra note
19 to the effect that 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.
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