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market value of a Sentinel EPE recycler, or the underlying
viability, financial structure, and economics of the Partnership
transactions. These sophisticated, able, and successful
taxpayers knew or should have known better. We hold, upon
consideration of the entire records, that petitioners are liable
for the negligence additions to tax under section 6653(a)(1) and
(2) for the taxable year at issue. Respondent is sustained on
this issue.
B. Section 6659--Valuation Overstatement
In notices of deficiency, respondent determined that
petitioners were liable for the section 6659 addition to tax on
the portion of their respective underpayments attributable to
valuation overstatement. Petitioners have the burden of proving
that respondent's determinations of the section 6659 additions to
tax in their cases are erroneous. Rule 142(a); Luman v.
Commissioner, 79 T.C. at 860-861.
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
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