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offering memorandum, promoters, or insiders to the transaction.
Petitioners’ accountants were asked to make only a limited
technical examination of the documents presented to them as a tax
shelter, and that is all they did. Petitioners, Grande, and Maki
did not undertake a good faith investigation of the fair market
value of the recyclers or the underlying economic viability or
financial structure of Masters.
Upon consideration of this record, we hold that petitioners
are liable for the negligence additions to tax under section
6653(a)(1) and (2).
B. Section 6659 Valuation Overstatement
In the notices of deficiency in these cases, respondent
determined that petitioners were liable for section 6659
additions to tax on the portions of their respective
underpayments attributable to valuation overstatements. 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. See
sec. 6659(a), (d). A valuation overstatement exists if the fair
market value (or adjusted basis) of 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).
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