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losses it reported on its 1982, 1983, and 1984 Federal income tax
returns because Hamilton did not incur “a loss in a trade or
business or in an activity entered into for profit or with
respect to property held for the production of income.” In the
FPAA’s, respondent also determined that Hamilton’s basis in the
recycling equipment was zero for purposes of the investment tax
and the business energy credits. The parties have stipulated
that this Court’s decision in Hamilton Recycling Associates v.
Commissioner, docket No. 9990-89, reflects a full concession by
Hamilton of all items of income, loss, and the underlying
equipment valuation used for tax credit purposes. In effect the
parties in the underlying partnership litigation stipulated that
Hamilton was not an activity entered into for the production of
income; the transaction lacked economic substance and was a sham.
Moreover, a concession based upon petitioners’ suggested ground
would not have resulted in a full denial of the claimed losses
and the recyclers’ having a zero basis for purposes of the
investment tax and business energy credits. Accordingly,
petitioners’ suggestion that our decision in Hamilton Recycling
Associates was premised upon the recyclers’ not having been
placed in service is unfounded.
In the present cases, petitioners have conceded that the
recyclers’ fair market value in 1982 was between $30,000 and
$50,000. Petitioners have also conceded that the Hamilton
transaction and the recyclers in these cases are substantially
identical to the transactions and recyclers considered in
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