- 20 -
that petitioners are liable for the negligence additions to tax
under the provisions of section 6653(a)(1) and (2) for 1981.
Respondent is sustained on this issue.
Issue 2. Sec. 6659 Valuation Overstatement
In a notice of deficiency, respondent determined that
petitioners Berry are liable for the section 6659 addition to tax
for valuation overstatement on the portion of their 1981
underpayment attributable to the investment tax and business
energy credits claimed with respect to Hyannis. Petitioners
Berry have the burden of proving that respondent's determination
is erroneous. Rule 142(a); Luman v. Commissioner, 79 T.C. 846,
860-861 (1982). In the case of petitioners Pace, respondent
asserted an addition to tax under section 6659 in an amendment to
answer. Because it was raised for the first time in her
amendment to answer, respondent bears the burden of proof on this
issue. Rule 142(a); Vecchio v. Commissioner, 103 T.C. 170, 196
(1994).
A graduated addition to tax is imposed when an individual
has an underpayment of tax that equals or exceeds $1,000 and "is
attributable to" a valuation overstatement. Sec. 6659(a), (d).
A valuation overstatement exists if the fair market value (or
adjusted basis) of property claimed on a return equals or exceeds
150 percent of the amount determined to be the correct amount.
Sec. 6659(c). If the claimed valuation exceeds 250 percent of
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011