- 33 -
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, 179 (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), affg. T.C. Memo.
1989-684 (section 6659 addition to tax applies if a finding of
lack of economic substance is "due in part" to a valuation
overstatement); Masters v. Commissioner, T.C. Memo. 1994-197;
Harness v. Commissioner, T.C. Memo. 1991-321.
In the respective stipulations of settled issues,
petitioners conceded that they "are not entitled to any
deductions, losses, investment credits, business energy
investment credits, or any other tax benefits claimed on their
tax returns as a result of their participation in the Plastics
Recycling Program." In Todd v. Commissioner, supra, and McCrary
v. Commissioner, supra, we denied application of section 6659,
even though the subject property was overvalued, because the
related deductions and credits had been conceded or denied in
their entirety on other grounds. In Todd, we found that an
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011