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burden of proof with respect to the increased addition to tax.
Rule 142(a); Bagby v. Commissioner, 102 T.C. at 612.
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
the correct value, the addition is equal to 30 percent of the
underpayment. Sec. 6659(b).
Petitioner claimed tax benefits, including an investment tax
credit and a business energy credit, based on purported values of
$1,162,666 for each Sentinel EPE recycler. Petitioner concedes
that the fair market value of a Sentinel EPE recycler in 1981 was
not in excess of $50,000. Therefore, if disallowance of
petitioner's claimed tax benefits is attributable to such
valuation overstatements, petitioner is liable for the section
6659 additions to tax at the rate of 30 percent of the portions
of his underpayments attributable to such valuation
overstatements.
Petitioner contends that section 6659 does not apply in this
case because the deductions and credits he claimed were
purportedly disallowed on grounds other than a valuation
overstatement. Petitioner relies on Gainer v. Commissioner, 893
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