- 43 -
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) (section 6659
addition to tax applies if a finding of lack of economic
substance is "due in part" to a valuation overstatement), affg.
T.C. Memo. 1989-684; Masters v. Commissioner, T.C. Memo. 1994-
197, affd. without published opinion 70 F.3d 1262 (4th Cir.
1995); Harness v. Commissioner, T.C. Memo. 1991-321.
In the respective stipulations of settled issues,
petitioners concede 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
underpayment was not attributable to a valuation overstatement
because property was not placed in service during the years in
issue. In McCrary, we found the taxpayers were not liable for
the section 6659 addition to tax when, prior to the trial of the
case, the taxpayers conceded that they were not entitled to the
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