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$5,000. Sec. 6662(e)(2). A gross valuation misstatement means
any substantial valuation misstatement, as determined under
section 6662(e), by substituting “400 percent” for “200 percent”.
Sec. 6662(h)(2)(A). Pursuant to section 6662(e)(1)(A), as read
without the referenced substitution of text, a substantial
valuation misstatement occurs if “the value of any property (or
the adjusted basis of any property) claimed on any return * * *
is 200 percent or more of the amount determined to be the correct
amount of such valuation or adjusted basis”. After the
referenced substitution of text, a gross valuation misstatement
occurs when the value or basis claimed on a return is 400 percent
or more of the correct value or basis.
No penalty is imposed under section 6662(h), however, to the
extent that the taxpayer had reasonable cause for the
underpayment of tax and acted in good faith with respect to the
underpayment. Sec. 6664(c)(1); see also Hansen v. Commissioner,
471 F.3d 1021, 1029 (9th Cir. 2006), affg. T.C. Memo. 2004-269.
The determination of whether a taxpayer acted with reasonable
cause and in good faith is made on a case-by-case basis, taking
into account all pertinent facts and circumstances. Sec.
1.6664-4(b)(1), Income Tax Regs.; see also Hansen v.
Commissioner, supra at 1028-1029. The extent of the taxpayer’s
efforts to ascertain his proper tax liability is generally the
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Last modified: November 10, 2007