- 8 -
made an attempt independently to evaluate or appraise the energy
management systems equipment, point to the conclusion that any
reliance that petitioner placed on Mr. Kanter as to the valuation
was unreasonable. See Addington v. Commissioner, 205 F.3d 54, 62
(2d Cir. 2000), affg. Sann v. Commissioner, T.C. Memo. 1997-259;
Gilman v. Commissioner, 933 F.2d 143, 151 (2d Cir. 1991), affg.
T.C. Memo. 1989-684; Singer v. Commissioner, T.C. Memo. 1997-325.
In light of the strict standard for abuse of discretion, we
conclude that respondent did not err by not exercising his
discretion under section 6659(e) to waive the addition to tax for
valuation overstatement.
Nor do we conclude that respondent erred as to the increased
rate of interest under section 6621(c). Section 6621(c) provides
that increased interest is due if a "substantial underpayment" is
attributable to a "tax motivated transaction". A substantial
underpayment is an underpayment of more than $1,000. See sec.
6621(c)(2). A tax-motivated transaction includes any valuation
overstatement under section 6659. See sec. 6621(c)(3)(A)(i).
Because we have determined that petitioner had a valuation
overstatement under section 6659, we hold that petitioner is
liable under section 6621(c) for an increased rate of interest on
the underpayment attributable thereto. See Barlow v.
Commissioner, T.C. Memo. 2000-339 (“once we decide that there is
a tax-motivated transaction such as a valuation overstatement * *
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