- 32 -
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).
Petitioners claimed tax benefits, including investment tax
credits and business energy credits, based on a purported value
of $1,750,000 for each recycler. In the present cases,
petitioners have stipulated that the fair market value of a
recycler in 1982 was between $30,000 and $50,000. Accordingly,
if disallowance of petitioners’ claimed benefits is attributable
to such valuation overstatements, petitioners are liable for
section 6659 additions to tax at the rate of 30 percent of the
underpayments of tax attributable to tax benefits claimed with
respect to Hamilton.
Petitioners contend that section 6659 does not apply in
their cases because (1) disallowance of the claimed tax benefits
was attributable to other than a valuation overstatement, and (2)
Hamilton’s concession in the underlying partnership case
precludes imposition of the section 6659 additions to tax.
1. The Grounds for Petitioners’ Underpayments
Petitioners contend that the section 6659 addition to tax
does not apply in their cases because the disallowance of the
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011