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4. Miscellaneous
The parties in these consolidated cases stipulated that the
fair market value of a Sentinel EPE recycler in 1981 and up to
the end of 1982 was not in excess of $50,000. Notwithstanding
this concession, petitioners contend that they were reasonable in
claiming credits on their Federal income tax returns based upon
each recycler's having a value of $1,162,666. In support of this
position, petitioners submitted into evidence preliminary reports
prepared for respondent by Ernest D. Carmagnola (Carmagnola), the
president of Professional Plastic Associates. Carmagnola had
been retained by the IRS in 1984 to evaluate the Sentinel EPE and
EPS recyclers in light of what he described as "the fantastic
values placed on the [recyclers] by the owners." Based on
limited information available to him at that time, Carmagnola
preliminarily estimated that the value of the Sentinel EPE
recycler was $250,000. However, after additional information
became available to him, Carmagnola concluded in a signed
affidavit, dated March 16, 1993, that the machines actually had a
fair market value of not more than $50,000 each in the Fall of
1981.
We accord no weight to the Carmagnola reports submitted by
petitioners. The projected valuations therein were based on
inadequate information, research, and investigation, and were
subsequently rejected and discredited by their author. In one
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