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sustain respondent’s determinations regarding the substantial
valuation overstatements and the gross valuation misstatement.
Petitioners have not argued, and no evidence in the record
suggests, that they had a reasonable basis or reasonable cause
for making the claims. Accordingly, with respect to 1984 and
1985--the years in which the entire deficiency was based upon
disallowance of the general business credit carrybacks–we hold
that petitioners are liable for the section 6659(a) addition to
tax with respect to the entire amount of the deficiency in each
year. We further hold that petitioners are liable for the
section 6659(a) addition to tax in 1987 and 1988, and the 40
percent section 6662(a) penalty in 1989, with respect to that
portion of the deficiency in each of those years that is
attributable to respondent’s disallowance of the Schedule F
depreciation deductions. Petitioners, however, are not liable
for the respective additions to tax with respect to the remaining
portions of the deficiencies in 1987, 1988, and 1989, because
these portions were not attributable to valuation overstatements.
Finally, we note that in the notice of deficiency,
respondent determined that petitioners are liable for the section
6662(a) penalty in 1989 both for a substantial valuation
overstatement and a gross valuation misstatement, resulting in
two separate additions to tax. However, the penalty for a gross
valuation misstatement is applied in lieu of the penalty for a
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