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The parties filed a Stipulation of Settled Issues concerning
the adjustments relating to petitioners' participation in the
Plastics Recycling Program. The stipulation provides:
1. Petitioners are not entitled to any deductions,
losses, investment credits, business energy investment
credits or any other tax benefits claimed on their tax
returns as a result of their participation in the
Plastics Recycling Program.
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 section 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 I.R.C. �6653(a).
4. With respect to the issue of the addition to the
tax under I.R.C. �6659, 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).
In their petition, petitioners raised the statute of
limitations on assessment as a bar to respondent's deficiency
determination. Respondent asserted otherwise in the answer, and
petitioners have not argued the statute of limitations elsewhere
in the record. In view of the third stipulation in the
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