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unrelated parties was for $337,000. On brief, petitioner relies
on evidence not admitted into the record and his own self-serving
statements in arguing that the value of the EMS was actually $5
million. We do not accept petitioner’s unsupported claim that
the EMS was actually worth $5 million, which we note is still
less than half of the $10,350,000 claimed value of the property.
The contemporaneous sale of the EMS for $337,000 makes it clear
that the claimed valuation of $10,350,000 exceeded 250 percent of
the correct value of the EMS.21
Under section 6659(e), the Commissioner may waive all or any
part of the addition to tax for a valuation overstatement if the
taxpayer shows that there was a “reasonable basis for the
valuation * * * claimed on the return and that such claim was in
good faith.” The Commissioner’s waiver is discretionary and
subject to review for abuse of discretion. Krause v.
Commissioner, 99 T.C. 132, 179 (1992). Petitioner has not shown
that there was a reasonable basis for the valuation overstatement
of the EMS. Accordingly, we hold that petitioner is liable for
the addition to tax of 30 percent of the underpayment of tax
under section 6659.
21We note that in order for petitioner to avoid application
of the 30-percent addition under sec. 6659(b), the EMS would have
to have had a minimum correct value of $4,140,000 (10,350,000 �
2.50 = 4,140,000). The evidence in the record reflects that the
correct value of the EMS was substantially below this amount.
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