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Snyder claimed investment tax and business energy credits
based on a purported value for the Sentinel EPE recycler in
excess of $1,162,000.15 Snyder concedes that the fair market
value of a Sentinel EPE recycler during 1981 and 1982 was not in
excess of $50,000. Therefore, if disallowance of the claimed
credits is attributable to the valuation overstatement, Snyder is
liable for the section 6659 addition to tax at the rate of 30
percent of the respective underpayments of tax attributable to
the credits claimed with respect to the Partnerships.
1. Concession of the Deficiency
Section 6659 does not apply to underpayments of tax that are
not "attributable to" valuation overstatements. See McCrary v.
Commissioner, supra; Todd v. Commissioner, 89 T.C. 912 (1987),
affd. 862 F.2d 540 (5th Cir. 1988). 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
15 In a Statement of Supplemental Information Pursuant to sec.
1.48-4(g)(4), Income Tax Regs., attached to SAB Recovery's 1981
partnership return, the fair market value of the seven recyclers
is listed as $8,138,667. Seven divided into $8,138,667 equals
$1,162,666. However, in two other statements attached to the
return, the partnership reports that its basis in qualifying
recycling equipment is $9,212,401. As reported on line 21 of his
Form K-1, Snyder's share of the basis is $412,683 (4.479638% x
9,212,401 = 412,682). The figure on the Form K-1 results from
round up and is the amount Snyder used to compute his tax
credits. The source of the additional basis is not clear from
the records.
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