- 29 - development profits. This offer is reasonably close to Mr. Handverger's appraisal of the Property and the figure used by petitioner on his 1986 income tax return. Section 6659 Valuation Overstatement Addition to Tax Respondent also determined that petitioner was liable for a section 6659 addition to tax for a valuation overstatement. A valuation overstatement exists if the value of any property or the adjusted basis of any property claimed on a return exceeds 150 percent of the amount determined to be the correct amount. Sec. 6659(c). With respect to charitable deduction property, the amount of the addition to tax is equal to 30 percent of the underpayment. Sec. 6659(f)(1). On his return, petitioner claimed that the fair market value of the property was $12 million. We have determined that the property's fair market value was actually $10,970,000. Therefore, petitioner did not overstate the fair market value of the property by 150 percent ($10,970,000 x 150% = $16,455,000), and he is not liable for the overvaluation addition to tax. Increased Interest Respondent also determined that petitioner was liable for additional interest pursuant to section 6621(c). Section 6621(c) provides for an interest rate of 120 percent of the adjusted rate established under section 6621(b) if there is a "substantialPage: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
Last modified: May 25, 2011