- 43 -
F.2d 225 (9th Cir. 1990), affg. T.C. Memo. 1988-416; Todd v.
Commissioner, 89 T.C. 912 (1987), affd. 862 F.2d 540 (5th Cir.
1988), in support of this argument.
Section 6659 does not apply to underpayments of tax that are
not "attributable to" valuation overstatements. See McCrary v.
Commissioner, 92 T.C. 827 (1989); Todd v. Commissioner, supra.
To the extent taxpayers claim tax benefits that are disallowed on
grounds separate and independent from alleged valuation
overstatements, the resulting underpayments of tax are not
regarded as attributable to valuation overstatements. Krause v.
Commissioner, 99 T.C. 132, 178 (1992) (citing Todd v.
Commissioner, supra), affd. sub nom. Hildebrand v. Commissioner,
28 F.3d 1024 (10th Cir. 1994). However, when valuation is an
integral factor in disallowing deductions and credits, section
6659 is applicable. See Illes v. Commissioner, 982 F.2d 163, 167
(6th Cir. 1992), affg. T.C. Memo. 1991-449; Gilman v.
Commissioner, 933 F.2d 143, 151 (2d Cir. 1991) (section 6659
addition to tax applies if a finding of lack of economic
substance is "due in part" to a valuation overstatement), affg.
T.C. Memo. 1989-684; Masters v. Commissioner, T.C. Memo. 1994-
197, affd. without published opinion 70 F.3d 1262 (4th Cir.
1995); Harness v. Commissioner, T.C. Memo. 1991-321.
Petitioner has not shown that disallowance of his claimed
tax benefits was due to anything other than a valuation
overstatement. In each of the notices of deficiency for 1981 and
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