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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).
Petitioners claimed an operating loss and investment tax
credits based on purported values of $993,014 for the tapes. This
Court found in Charlton v. Commissioner, T.C. Memo. 1990-402,
that the tapes were grossly overvalued. We find that if
disallowance of petitioners' claimed tax benefits is attributable
to valuation overstatement, petitioners are liable for the
section 6659 additions to tax at the rate of 30 percent of the
underpayments of tax attributable to the tax benefits claimed
with respect to MSA.
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, 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 attributable to
valuation overstatements. Krause v. Commissioner, 99 T.C. 132,
178 (1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d
1024 (10th Cir. 1994). However, when valuation is an integral
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