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In Provizer v. Commissioner, T.C. Memo. 1992-177, the test
cases for the Plastics Recycling group of cases, this Court:
(1) Found that each recycler had a fair market value of not more
than $50,000; (2) held that the transaction, which was virtually
identical to the transactions in the present cases, was a sham
because it lacked economic substance and a business purpose;
(3) sustained the additions to tax for negligence under section
6653(a)(1) and (2); (4) sustained the addition to tax for
valuation overstatement under section 6659 because the
underpayment of taxes was directly related to the overvaluation
of the recyclers; and (5) held that the partnership losses and
tax credits claimed with respect to the plastics recycling
partnership at issue were attributable to tax-motivated
transactions within the meaning of section 6621(c). We also
found that other recyclers were commercially available during the
year in issue. See Provizer v. Commissioner, supra. In reaching
the conclusion that the transaction lacked a business purpose,
this Court heavily relied upon the overvaluation of the
recyclers. Similarly, in Gottsegen v. Commissioner, supra, we
found that each Sentinel EPS recycler had a fair market value not
in excess of $50,000.
A. Section 6653(a)(1) and (2) Negligence
In each of the present cases, respondent determined that
petitioners were liable for additions to tax for negligence under
section 6653(a)(1) and (2) with respect to an underpayment
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