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overstatement” represents a less common application of
section 6659, we believe it comprehends the tax return
representations that Congress intended to penalize.
Merino v. Commissioner, 196 F.3d at 158-159 (quoting Gilman v.
Commissioner, supra at 152). Petitioner argues, however, that
the Court of Appeals for the Third Circuit tempered its reliance
on Gilman by holding that “where a claimed tax benefit is
disallowed because it is an integral part of a transaction
lacking economic substance, the imposition of the valuation
overstatement penalty is properly imposed, absent considerations
that are not present here.” Merino v. Commissioner, 196 F.3d at
159 (emphasis added). Petitioner thus compares himself to the
Heasleys and contends that those considerations “might * * *
include the fact that the Heasleys were ripped off like Dr.
Korchak”. We are not persuaded by petitioner’s comparison.
The Court of Appeals for the Third Circuit reasoned that
the Court of Appeals for the Fifth Circuit’s decision in Heasley
was based on “understandable sympathy” for the Heasleys and
highlighted the facts that the Heasleys were blue-collar workers
without a high school education who relied completely on an
investment adviser out of concern for their family’s future and
awareness that they were not knowledgeable enough to invest on
their own. Id. at 158. The Court of Appeals for the Third
Circuit also reasoned, however, that “the Merinos [were] not the
Heasleys” and that due to the significant differences between
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