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V. Accuracy-Related Penalty
We have found the value of the stock held by the estate is
the value the estate reported on its return. We therefore need
not address whether the estate is liable for the accuracy-related
penalty. Respondent also determined that the petitioners in the
gift tax cases were liable for the accuracy-related penalty under
section 6662(a).
There is generally a 20-percent penalty on any portion of an
underpayment attributable to a substantial estate or gift tax
valuation understatement. Sec. 6662(a) and (b)(5). There is a
gift tax valuation understatement where property is reported on a
gift tax return at a value 50 percent or less than the value
eventually determined by the court. Sec. 6662(g)(1). Where
property is reported at a value less than 25 percent of the value
eventually determined by the court, the penalty imposed under
section 6662 is increased from 20 percent to 40 percent. Sec.
6662(h). Respondent has the burden of production regarding
penalties and must come forward with evidence that it is
appropriate to impose the penalty. See sec. 7491(c); Higbee v.
Commissioner, 116 T.C. 438, 446-447 (2001).
The parties have stipulated that the final value of the
gifts will be governed by our ruling on the value of the estate’s
stock and have provided us with the formula they intend to use to
calculate the valuation of each gift. Based on our review of
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