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petitioners have demonstrated exercise of due care in their
individual situation and with their particular background and
circumstances. Accordingly, we hold for petitioners on this
issue.
Issue (2) Section 6659 Valuation Overstatement
Petitioners also contest the addition to tax under section
6659 for a valuation overstatement. A valuation that exceeds the
correct valuation by 150 percent or more constitutes a valuation
overstatement. See sec. 6659(c). Petitioners have conceded that
assets with values not exceeding $50,000 were valued at
$1,750,000. There was therefore a valuation overstatement under
section 6659.
Petitioners contend that respondent abused his discretion in
failing to exercise the authority under section 6659(e) to waive
the addition to tax for the valuation overstatement. Under
section 6659(e) the Commissioner may waive all or any part of the
valuation overstatement addition upon a showing by the taxpayer
that there was a "reasonable basis for the valuation * * *
claimed on the return and that such claim was in good faith."
The Commissioner's waiver is discretionary and subject to review
for an abuse of discretion. See Krause v. Commissioner, 99 T.C.
132 (1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d
1024 (10th Cir. 1994).
On the record before us, there is no indication that
petitioners requested a waiver from respondent at any time prior
to the filing of their posttrial brief. Given that petitioners
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