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Commissioner, 893 F.2d 225 (9th Cir. 1990); Irom v. Commissioner,
866 F.2d 545, 547 (2d Cir. 1989), vacating in part T.C. Memo.
1988-211; Harness v. Commissioner, T.C. Memo. 1991-321.
In these cases, petitioners each stipulated substantially
the same facts concerning the Hamilton transaction as we found in
Provizer v. Commissioner, supra. In Provizer, we held that the
taxpayers were liable for the section 6659 addition to tax
because the underpayment of taxes was directly related to the
overvaluation of the recyclers. The overvaluation of the
recyclers, exceeding 2,325 percent, was an integral part of our
findings in Provizer that the transaction was a sham and lacked
economic substance. Similarly, the overvaluation of the
recyclers was integral to and was the core of our holding that
Hamilton was a sham and lacked economic substance.
Petitioners’ reliance on McCrary v. Commissioner, supra, is
misplaced. In McCrary, the taxpayers conceded entitlement to
their claimed tax benefits, and the section 6659 addition to tax
was held inapplicable. However, the taxpayers’ concession of the
claimed tax benefits, in and of itself, did not preclude
imposition of the section 6659 addition to tax. In McCrary v.
Commissioner, supra, the section 6659 addition to tax was
disallowed because the agreement at issue was conceded to be a
license and not a lease. In contrast, in these cases
petitioners’ underpayments were attributable to overvaluation of
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