- 38 -
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 (1989).
Hamilton’s concession does not obviate our finding that
Hamilton 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 Hamilton, petitioners claimed deductions and credits that
resulted in underpayments of tax. Regardless of Hamilton’s
concession in the underlying partnership case, in these cases the
underpayments of tax were attributable to the valuation
overstatements.
Moreover, concession of the investment tax credit in and of
itself does not relieve taxpayers of liability for the section
6659 addition to tax. See Singer v. Commissioner, supra; Kaliban
v. Commissioner, supra; Sann v. Commissioner, supra; Dybsand v.
Commissioner, T.C. Memo. 1994-56; Chiechi v. Commissioner, T.C.
Memo. 1993-630. Instead, the ground upon which the investment
tax credit is disallowed or conceded is significant. See Dybsand
v. Commissioner, supra. Even in situations in which there are
arguably two grounds to support a deficiency and one supports a
section 6659 addition to tax and the other does not, the taxpayer
may still be liable for the addition to tax. See Gainer v.
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