- 48 -
recycler was established in Provizer v. Commissioner, T.C. Memo.
1992-177, and stipulated by the parties. As a consequence of the
inflated value assigned to the recyclers by Plymouth, petitioners
claimed an operating loss deduction and credits that resulted in
an underpayment of tax, and we held that the Plymouth transaction
lacked economic substance. Regardless of petitioners'
concession, in this case the underpayment of tax was attributable
to the valuation overstatement.
Moreover, concession of the investment tax credit in and of
itself does not relieve taxpayers of liability for the section
6659 addition to tax. See Dybsand v. Commissioner, T.C. Memo.
1994-56; Chiechi v. Commissioner, T.C. Memo. 1993-630. Instead,
the ground upon which the investment tax credit is disallowed or
conceded is significant. Dybsand v. Commissioner, supra. Even
in situations in which there are arguably two grounds to support
a deficiency and one supports a section 6659 addition to tax and
the other does not, the taxpayer may still be liable for the
addition to tax. Gainer v. Commissioner, 893 F.2d at 228; Irom
v. Commissioner, 866 F.2d 545, 547 (2d Cir. 1989), vacating in
part T.C. Memo. 1988-211; Harness v. Commissioner, T.C. Memo.
1991-321.
In the present case, no argument was made and no evidence
was presented to the Court to prove that disallowance and
concession of the claimed investment tax credits and other tax
benefits related to anything other than a valuation
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