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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 claimed tax benefits, including an investment
tax credit and a business energy credit, based on purported
values of $1,162,666 for each Sentinel EPE recycler. Petitioners
each concede that the fair market value of a Sentinel EPE
recycler in 1981 and 1982 was not in excess of $50,000.
Therefore, if disallowance of petitioners' claimed tax benefits
is attributable to such valuation overstatements, petitioners are
liable for the section 6659 addition to tax at the rate of 30
percent of the underpayment of tax attributable to the tax
benefits claimed with respect to the Partnerships.
Both petitioners argue that respondent erroneously failed to
waive the section 6659 addition to tax. Farrell also expressly
contends that the section 6659 addition to tax is inapplicable
because: (1) Disallowance of the claimed tax benefits was
attributable to other than a valuation overstatement; and (2)
concession of the claimed tax benefits precludes imposition of
the section 6659 additions to tax.
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