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3. Section 6659(e)
Both petitioners argue that respondent erroneously failed to
waive the section 6659 additions to tax. Section 6659(e)
authorizes respondent to waive all or part of the addition to tax
for valuation overstatement if taxpayers establish that there was
a reasonable basis for the adjusted bases or valuations claimed
on the returns and that such claims were made in good faith.
Respondent's refusal to waive a section 6659 addition to tax is
reviewable by this Court for abuse of discretion. Krause v.
Commissioner, 99 T.C. 132, 179 (1992).
Petitioners urge that they relied on Becker and the offering
memorandum in deciding on the valuation claimed on their tax
returns. Petitioners contend that such reliance was reasonable,
and, therefore, respondent should have waived the section 6659
additions to tax.29 However, as we explained above in finding
petitioners liable for the negligence additions to tax,
petitioners' purported reliance on Becker and the offering
materials was not reasonable.
Becker possessed no special qualifications or professional
skills in the recycling or plastics industries. He relied
exclusively on PI and its personnel and on the offering materials
29 In his posttrial brief, Farrell referenced the reports
prepared by Carmagnola in support of the reasonableness of the
claimed valuation. For reasons discussed supra, we consider the
reports prepared by Carmagnola to be unreliable and of no
consequence.
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