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forth in the Hurt appraisal. Additionally, the evidence
presented regarding comparable sales does not support
petitioners' claimed fair market value of the boat.
Based on the evidence presented at trial, we conclude that
petitioners are not entitled to a deduction for the boat in
excess of the amount determined by respondent.
Substantial Valuation Misstatement
Taxpayers are liable for a penalty equal to 20 percent of
the portion of the underpayment of tax attributable to a
substantial valuation misstatement. Sec. 6662(a), (b)(3).
Section 6662(e)(1)(A) provides that there is a substantial
valuation misstatement if the value of any property claimed on
any tax return imposed by chapter 1 is 200 percent or more of the
amount determined to be the correct value.6 The accuracy-related
penalty under section 6662(a) does not apply to any portion of an
underpayment if the taxpayer shows that there was reasonable
cause for such portion and that the taxpayer acted in good faith.
Sec. 6664(c)(1). Section 6664(c)(1), however, shall not apply in
the case of any underpayment attributable to a substantial or
gross valuation overstatement under chapter 1 with respect to any
property contributed by the taxpayer for which a deduction was
claimed under section 170 unless (1) the claimed value of the
property was based on a "qualified appraisal" made by a
6 Sec. 6662(e)(2) provides an exception that is not
applicable in the instant case.
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Last modified: May 25, 2011