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conceded the $45,095 investment interest expense adjustment but
did not concede the additions to tax attributable thereto.
Respondent determined that the amount of the addition to tax
under section 6659 was 30 percent of the underpayment
attributable to these adjustments.
Section 6659 provides for an addition to tax for
underpayments attributable to valuation overstatements. A
valuation overstatement exists if, among other conditions, the
adjusted basis of property claimed on the return equals or
exceeds 150 percent of the correct amount of the basis. As to
the year at issue, for valuation overstatements of 150 percent or
more but not more than 200 percent, the addition to tax is 10
percent of the underpayment attributable to the valuation
overstatement; for valuation overstatements of more than 200
percent but less than 250 percent, the addition is 20 percent of
the underpayment attributable to the valuation overstatement; and
for valuation overstatements of 250 percent or more, the addition
is 30 percent of the underpayment attributable to the valuation
overstatement. No addition is imposed under section 6659 unless
the underpayment in tax attributable to the valuation
overstatement is at least $1,000.
The Kanters contend that they should not be held liable for
the addition to tax under section 6659, citing Heasley v.
Commissioner, 902 F.2d 380 (5th Cir. 1990), revg. T.C. Memo.
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