- 33 -
of the machines and that he estimated those costs in his
valuations of the machines.
Respondent rejected the Carmagnola reports and considered
them unsatisfactory for any purpose, and there is no indication
in the record that respondent used them as a basis for any
determinations in the notice of deficiency. Even so, counsel for
petitioners obtained copies of these reports and urge that they
support the reasonableness of the value reported on petitioners'
1981 return. Not surprisingly, petitioners' counsel did not call
Carmagnola to testify in this case, but preferred instead to rely
solely upon his preliminary ill-founded valuation estimates
(Carmagnola has not been called to testify in any of the Plastics
Recycling cases before us). The Carmagnola reports were a part
of the record considered by this Court and reviewed by the Sixth
Circuit Court of Appeals in the Provizer case, where we held the
taxpayers negligent. Consistent therewith, we find in this case,
as we have found previously, that the reports prepared by
Carmagnola are unreliable and of no consequence.
Petitioners cite a number of cases in support of their
position, including Balboa Energy Fund 1981 v. Commissioner, 85
F.3d 634 (9th Cir. 1996), affg. in part and revg. in part without
published opinion Osterhout v. Commissioner, T.C. Memo. 1993-251;
Durrett v. Commissioner, 71 F.3d 515 (5th Cir. 1996), affg. in
part and revg. in part T.C. Memo. 1994-179; Chamberlain v.
Commissioner, 66 F.3d 729 (5th Cir. 1995), affg. in part and
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