- 30 -
In the present cases, petitioners have conceded that the
recyclers’ fair market value in 1982 did not exceed $50,000.
Petitioners have also conceded that the Masters transaction and
the recyclers in these cases are substantially identical to the
transactions and recyclers considered in Provizer v.
Commissioner, T.C. Memo. 1992-177. In Provizer, our finding that
the recyclers were overvalued was the dominant factor that led us
to hold that the transaction lacked economic substance. See Sann
v. Commissioner, T.C. Memo. 1997-259. Based on this record, we
find that the recyclers overvaluation was a dominant factor in
regard to: (1) The disallowed tax credits, and other benefits in
these cases; (2) the underpayments of tax; and (3) the
determination that the Masters transaction lacked economic
substance.
Lastly, we note that petitioners’ argument is similar to the
arguments that were raised in other plastics recycling cases.
See Merino v. Commissioner, 196 F.3d 147 (3d Cir. 1999); Singer
v. Commissioner, T.C. Memo. 1997-325; Kaliban v. Commissioner,
4(...continued)
application of Todd v. Commissioner, 862 F.2d 540 (5th Cir.
1988), affg. 89 T.C. 912 (1987), we consider Heasley
distinguishable. To the extent that Heasley is based on a
concept that where an underpayment derives from the disallowance
of a transaction for lack of economic substance, the underpayment
cannot be attributable to an overvaluation, this Court, as well
as the Court of Appeals for the Eighth Circuit have disagreed.
See Massengill v. Commissioner, 876 F.2d 616 (8th Cir. 1989),
affg. T.C. Memo. 1988-427.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011