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tax benefits was attributable to other than a valuation
overstatement, and (2) respondent erroneously failed to waive
the section 6659 addition to tax. We reject each of these
arguments for the reasons set forth below.
1. The Grounds for Petitioner’s Underpayments
Section 6659 does not apply to an underpayment of tax that
is not attributable to a valuation overstatement. See McCrary
v. Commissioner, 92 T.C. 827 (1989); Todd v. Commissioner, 89
T.C. 912 (1987), affd. 862 F.2d 540 (5th Cir. 1988). To the
extent a taxpayer claims tax benefits that are disallowed on
grounds separate and independent from an alleged valuation
overstatement, the resulting underpayment of tax is not
attributable to a valuation overstatement. Krause v.
Commissioner, 99 T.C. 132, 178 (1992) (citing Todd v.
Commissioner, supra), affd. sub nom. Hildebrand v. Commissioner,
28 F.3d 1024 (10th Cir. 1994). However, when valuation is an
integral factor in disallowing deductions and credits, section
6659 is applicable. See Illes v. Commissioner, 982 F.2d 163,
167 (6th Cir. 1992), affg. T.C. Memo. 1991-449; Masters v.
Commissioner, T.C. Memo. 1994-197, affd. without published
opinion 70 F.3d 1262 (4th Cir. 1995).
Petitioner contends that the section 6659 addition to tax
does not apply in his case because “the Commissioner totally
disallowed all credits and deductions in the underlying TEFRA
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