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offering memorandum warned that the Internal Revenue Service
would likely challenge their purported value. Yet the record
indicates that petitioners' sought no verification of the value
of the recyclers; their only concern was whether the recyclers
actually existed.
Petitioners did not have a reasonable basis for the adjusted
bases or valuations claimed on their 1981 returns with respect to
their investments in Hyannis. Accordingly, in these cases
respondent could find that petitioners' purported reliance on
Greenstein and the promotional materials was unreasonable. The
records here do not establish an abuse of discretion on the part
of respondent but support respondent's position. We hold that
respondent's refusal to waive the section 6659 additions to tax
is not an abuse of discretion. Petitioners are liable for the
respective section 6659 additions to tax at the rate of 30
percent of the underpayment of tax attributable to the disallowed
credits for 1981. Respondent is sustained on this issue.
Issue 3. Sec. 6621(c) Tax-Motivated Transactions
With respect to petitioners Pace, respondent determined that
interest on deficiencies accruing after December 31, 1984, would
be calculated under section 6621(c). Petitioners Pace have the
burden of proving that respondent's determination is erroneous.
Rule 142(a); Luman v. Commissioner, 79 T.C. 846 (1982). With
respect to petitioners Berry, respondent asserted the section
6621(c) interest calculation in an amendment to answer. Because
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