- 31 -
T.C. Memo. 1997-271; Sann v. Commissioner, supra. In all of
those cases, we rejected this argument.
2. Concession of the Deficiency
Petitioners also argue that Masters’ concession in the
underlying partnership case precludes imposition of the section
6659 additions to tax. Petitioners contend that Masters’
concession renders any inquiry into the grounds for such
deficiencies moot. Petitioners argue that absent such inquiry it
cannot be known if their underpayments were attributable to a
valuation overstatement or other discrepancy and that without a
finding that a valuation overstatement contributed to an
underpayment, section 6659 cannot apply. In support of this line
of reasoning, petitioners rely heavily upon Heasley v.
Commissioner, 902 F.2d 380 (5th Cir. 1990), and McCrary v.
Commissioner, 92 T.C. 827 (1980).
Masters’ concession does not obviate our finding that
Masters lacked economic substance due to overvaluation of the
recyclers. The value of the recyclers was established in
Provizer v. Commissioner, supra, and stipulated by the parties.
As a consequence of the inflated value assigned to the recyclers
by Masters, petitioners claimed deductions and credits that
resulted in underpayments of tax. Regardless of Masters’
concession in the underlying partnership case, in these cases the
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