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development profits. This offer is reasonably close to Mr.
Handverger's appraisal of the Property and the figure used by
petitioner on his 1986 income tax return.
Section 6659 Valuation Overstatement Addition to Tax
Respondent also determined that petitioner was liable for a
section 6659 addition to tax for a valuation overstatement. A
valuation overstatement exists if the value of any property or
the adjusted basis of any property claimed on a return exceeds
150 percent of the amount determined to be the correct amount.
Sec. 6659(c). With respect to charitable deduction property, the
amount of the addition to tax is equal to 30 percent of the
underpayment. Sec. 6659(f)(1). On his return, petitioner
claimed that the fair market value of the property was $12
million. We have determined that the property's fair market
value was actually $10,970,000. Therefore, petitioner did not
overstate the fair market value of the property by 150 percent
($10,970,000 x 150% = $16,455,000), and he is not liable for the
overvaluation addition to tax.
Increased Interest
Respondent also determined that petitioner was liable for
additional interest pursuant to section 6621(c). Section 6621(c)
provides for an interest rate of 120 percent of the adjusted rate
established under section 6621(b) if there is a "substantial
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