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determination that petitioner is liable for the section
6651(a)(1) addition to tax for 1993 is sustained.
Section 6662(h) Penalty
Respondent determined that petitioner is liable for the
accuracy-related penalty under section 6662(h) for 1993 and 1994.
Petitioner argues that he reasonably relied on the Brueggemann
inventory and Malina’s appraisal and that he substantially
complied with applicable requirements.
Taxpayers are liable for a penalty equal to 40 percent of
the portion of an underpayment of tax attributable to a gross
valuation misstatement. See sec. 6662(a), (h). Section
6662(h)(2)(A) provides that there is a gross valuation
misstatement if the value of any property claimed on a tax return
is 400 percent or more of the amount determined to be the correct
value. See also sec. 6662(h)(2)(A), (e)(1)(A). In this case,
the value of the contributed property that was claimed on
petitioner’s Federal income tax return, $949,030, exceeds 400
percent of the value determined to be correct, $12,973.
The accuracy-related penalty under section 6662(h) 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. See sec. 6664(c)(1). However, the
good faith exception applies only to a section 170 deduction if
(1) the claimed value of the property was based on a “qualified
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