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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
the correct value, the addition is equal to 30 percent of the
underpayment. Sec. 6659(b).
Petitioners each claimed an investment tax credit and a
business energy credit based on purported values of $1,162,666
for each Sentinel EPE recycler. Each of petitioners concedes
that the fair market value of each recycler was not in excess of
$50,000. Therefore, if disallowance of petitioners' claimed
credits is attributable to the valuation overstatements,
petitioners are 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.
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 regarded as
attributable to valuation overstatements. Krause v.
Commissioner, 99 T.C. 132, 178 (1992) (citing Todd v.
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