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is that petitioner did not use reasonable and prudent care in
investing in and claiming the deductions and credits from this
scheme. Respondent’s determinations as to the additions to tax
under section 6653(a) are sustained.
B. Section 6659--Valuation Overstatement
Under section 6659 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 the
property claimed on a return equals or exceeds 150 percent of the
amount determined to be the correct amount. See sec. 6659(c).
If the claimed valuation exceeds 250 percent of the correct
value, the addition is equal to 30 percent of the underpayment.
See sec. 6659(b).
In the notice of deficiency, respondent determined that
petitioner is liable for the section 6659 addition to tax on the
portion of his underpayment attributable to valuation
overstatement. Petitioner has the burden of proving that
respondent's determination of the section 6659 addition to tax is
erroneous. See Rule 142(a); Luman v. Commissioner, supra at 860-
861.
Petitioner received tax benefits, including investment and
business energy tax credits, based on a purported value of
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Last modified: May 25, 2011