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Under section 6662(g),96 respondent apparently takes the
position that the determination whether the percentage threshold
for a substantial or gross valuation understatement has been
reached is made on a property-by-property basis. See Part XX
Penalties Handbook, Internal Revenue Manual (RIA), sec.
120.1.5.11.2. In the absence of any argument to the contrary by
any of the parties in this case, we use this specifically
targeted approach.
96SEC 6662(g). SUBSTANTIAL ESTATE OR GIFT TAX VALUATION
UNDERSTATEMENT.
(1) In General.--For purposes of this section, there is
a substantial estate or gift tax valuation understatement if the
value of any property claimed on any return of tax imposed by
subtitle B is 50 percent or less of the amount determined to be
the correct amount of such valuation.
* * * * * * *
(h) INCREASE IN PENALTY IN CASE OF GROSS
VALUATION MISSTATEMENTS.
(1) In General.--To the extent that a portion of the
underpayment to which this section applies is attributable to one
or more gross valuation misstatements, subsection (a) shall be
applied with respect to such portion by substituting “40 percent”
for “20 percent”.
(2) Gross Valuation Misstatements.--The term “gross
valuation misstatements” means--
* * * * * * *
(C) any substantial estate or gift tax valuation
understatement as determined under subsection (g) by substituting
“25 percent” for “50 percent”.
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