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though he was a engineer by training, petitioner did no research
with respect to whether there were comparable recyclers and what
were the value of the machines.
C. Petitioner’s Interest in SAB and the Tax Returns
In 1982, petitioner invested $5,500 in Overview Associates
(Overview), a partnership, which in turn had a 19.974705-percent
interest in SAB. On its 1982 partnership return, SAB reported
that each of the four recyclers had a basis of $1,750,000 and
that its bases for the purposes of the investment and business
energy tax credits were $7 million. In Provizer v. Commissioner,
supra, we found that of the $7 million only 7 percent was paid in
cash. Overview, the second tier-partnership, reported its
aliquot share of the tax credits and deductions. On his 1982
Federal income tax return, petitioner claimed an ordinary loss of
$4,298 and reported a $44,841 basis eligible for the investment
tax credit upon which an investment tax credit of $2,814 was
claimed by petitioner.
SAB was a so-called TEFRA partnership to which the
provisions of sections 6221 through 6233 apply. On August 18,
1993, this Court entered a decision in SAB Recycling Associates
1982 v. Commissioner, docket No. 4504-92. Based on the decision
in that case, respondent issued a notice of deficiency for so-
called affected items to petitioner for the additions to tax
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