John Sann and Marianne Sann, et al. - Page 7

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          Commissioner, T.C. Memo. 1996-399; Zenkel v. Commissioner, T.C.             
          Memo. 1996-398.                                                             
               The issues remaining in these consolidated cases are:  (1)             
          Whether the assessments for 1982 are time-barred; (2) whether               
          petitioners are liable for the additions to tax for negligence              
          under section 6653(a)(1) and (2); and (3) whether petitioners are           
          liable for the additions to tax under section 6659 for                      
          underpayments of tax attributable to valuation overstatements.              
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated in each case and are            
          so found.  The stipulated facts and attached exhibits are                   
          incorporated in the respective cases by this reference.                     
          A.  The Plastics Recycling Transactions                                     
               These cases concern petitioners' indirect investments in               
          three limited partnerships that leased Sentinel expanded                    
          polyethylene (EPE) recyclers:  Empire Associates (Empire),                  
          Plymouth Equipment Associates (Plymouth), and Foam Recycling                
          Associates (Foam).  For convenience we refer to these                       
          partnerships collectively as the Partnerships.                              
               Petitioners acquired their indirect interests in the                   
          Partnerships through three other partnerships:  S&H Empire (a               
          tier of Empire), Plymouth Partners (a tier of Plymouth), and                
          Jabrilach Recycling (a tier of Foam).                                       
               The transactions involving the Sentinel EPE recyclers                  
          purportedly leased by the Partnerships are substantially                    

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