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purported advisers in good faith investigated the fair market
value of a Sentinel EPE recycler, or the underlying viability,
financial structure, and economics of the Partnership
transactions. We hold, upon consideration of the entire records,
that petitioners are liable for the negligence additions to tax
under section 6653(a)(1) and (2) for the taxable years at issue.
Respondent is sustained on this issue.
B. Section 6659--Valuation Overstatement
In the notices of deficiency for 1981, respondent determined
that petitioners were each liable for the section 6659 addition
to tax on the portions of their respective underpayments
attributable to valuation overstatement. Petitioners have the
burden of proving that respondent's determinations of the section
6659 additions to tax in their cases 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).
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