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claimed tax benefits was not attributable to a valuation
overstatement. Specifically, petitioners argue that where, as
here, the Commissioner completely disallows a tax benefit, the
tax underpayment cannot be attributable to a valuation
overstatement. Petitioners also contend that there exists an
alternate ground for the disallowance of the claimed tax benefits
that is independent of an overvaluation overstatement.
Petitioners argue that the disallowance of the claimed benefits
was partially premised on the fact that only one of the four
recyclers leased by Hamilton was placed in service by September
30, 1983. Petitioners cite the following cases to support their
argument: Heasley v. Commissioner, 902 F.2d 380 (5th Cir. 1990),
revg. T.C. Memo. 1988-408; Gainer v. Commissioner, 893 F.2d 225
(9th Cir 1990), affg. T.C. Memo. 1988-416; Todd v. Commissioner,
862 F.2d 540 (5th Cir. 1988), affg. 89 T.C. 912 (1987); McCrary
v. Commissioner, 92 T.C. 827 (1989).
Section 6659 does not apply to underpayments of tax that are
not “attributable to” valuation overstatements. Todd v.
Commissioner, supra at 541; McCrary v. Commissioner, supra at
851. “To the extent taxpayers claim tax benefits that are
disallowed on grounds separately and independently from alleged
valuation overstatements, the resulting underpayments of tax are
not regarded as attributable to valuation overstatements.”
Krause v. Commissioner, 99 T.C. 132, 178 (1992) (citing Todd v.
Commissioner, supra). However, when valuation is an integral
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