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to the penalty under section 6659.” Massengill v. Commissioner,
supra at 619-620; see also Zirker v. Commissioner, 87 T.C. 970
(1986).
We also find that the facts in these cases are
distinguishable from the facts in Gainer v. Commissioner, supra,
Todd v. Commissioner, supra, and McCrary v. Commissioner, supra.
In Gainer and Todd, it was found that a valuation overstatement
did not contribute to an underpayment of taxes. In those cases,
the underpayments were due exclusively to the fact that the
property in each case had not been placed in service. In
McCrary, the underpayments were deemed to result from a
concession that the agreement at issue was a license and not a
lease. Although property was overvalued in each of those cases,
the overvaluation was not the grounds on which the taxpayers’
liabilities were sustained. In contrast, a “different situation
exists where a valuation overstatement * * * is an integral part
of or is inseparable from the ground found for disallowance of an
item.” McCrary v. Commissioner, supra at 859. In the present
cases, we find that the overvaluation of the recyclers was
integral to and inseparable from petitioners’ claimed tax
benefits and the determination that Masters lacked economic
substance.4
4 To the extent that Heasley v. Commissioner, 902 F.2d 380
(5th Cir. 1990), revg. T.C. Memo. 1988-408, merely represents an
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