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for purposes of section 6621(c)(3)(A)(i). According to
respondent, the Todd, Gainer, and McCrary decisions (which
petitioners rely upon) are distinguishable. Respondent points
out that the parties in the instant case, besides agreeing that
the sheep partnerships are not entitled to almost all the tax
benefits they originally claimed for the years at issue, have
stipulated and agreed that (1) the partnerships failed to acquire
the benefits and burdens of ownership of any sheep, (2) many of
the purported breeding sheep a partnership allegedly purchased
were fictitious, and (3) each partnership’s stated purchase price
for its “sheep” greatly exceeded the value of those “sheep”.
Citing decisions of several appellate courts and this Court,
respondent asserts that where a partnership fails to acquire
ownership of any sheep for tax purposes, the partnership’s
correct adjusted basis for the sheep is zero, and a valuation
overstatement under section 6621(c)(3)(A)(i) exists. See Rose v.
Commissioner, 868 F.2d 851, 854 (6th Cir. 1989), affg. 88 T.C.
386 (1987); Zirker v. Commissioner, 87 T.C. 970, 978-979, 981
(1986); see also Zfass v. Commissioner, 118 F.3d 184, 190-191
(4th Cir. 1997) (and cases cited thereat), affg. T.C. Memo. 1996-
167; cf. Singer v. Commissioner, T.C. Memo. 1997-325; Greene v.
Commissioner, T.C. Memo. 1997-296.
Respondent additionally disagrees with petitioners’ argument
that the partnership transactions do not involve sham or
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