Bruce and Lois Zenkel, et al. - Page 63

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          Petitioners have the burden of proving that respondent's                    
          determinations of these section 6659 additions to tax 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              
          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           
          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.                                                








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