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holding on this issue is the same, regardless of the incidence of
the burden of proof. Respondent is sustained on this issue.
B. Section 6659--Valuation Overstatement
In the notice of deficiency, respondent determined that
petitioners were liable for the section 6659 addition to tax on
the portion of their underpayment attributable to valuation
overstatement. In respondent's trial memorandum and posttrial
brief, respondent conceded that the section 6659 addition to tax
is to be applied only to the portion of the deficiency
attributable to the disallowed investment tax and business energy
credits derived from Plymouth. Petitioners have the burden of
proving that respondent's determination of the section 6659
addition to tax is erroneous. Rule 142(a); Luman v.
Commissioner, 79 T.C. 846, 860-861 (1982).
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 investment tax
credits and business energy credits, based on a purported value
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