- 70 -
B. Analysis
On brief, respondent specifically acknowledges that, if we
deny petitioners' charitable contribution deductions for reasons
other than their overvaluation of the transferred intangibles,
"the penalty is not applicable", citing Gainer v. Commissioner,
893 F.2d 225 (9th Cir. 1990), affg. T.C. Memo. 1988-416.
In Gainer, the issue was whether the taxpayer was liable for
the overstatement penalty under circumstances in which his
depreciation deduction and investment tax credit with respect to
an equipment purchase were denied because: (1) The equipment was
not placed in service during the taxable year, (2) the equipment
was overvalued, and (3) the promissory note given in connection
with the purchase was nonrecourse so that he was not at risk. We
refused to apply the penalty on the ground that the deduction and
credit were disallowed because the equipment had not been placed
in service during the tax year. Therefore, the underpayments were
not "attributable to" any overstatement of value.42 The Court of
Appeals for the Ninth Circuit affirmed, reasoning as follows:
Even if Gainer had correctly valued the container, the
underpayment of tax would be the same because the
container was not placed in service. Thus, Gainer's
actual tax liability, after adjusting for failure to
place the container in service, was no different from
42 Sec. 6662(b)(3), like its predecessor provision (sec.
6659) considered in Gainer, imposes an addition to tax on
underpayments "attributable to" any "substantial valuation
misstatement" (referred to, in sec. 6659, as "a valuation
overstatement").
Page: Previous 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Next
Last modified: March 27, 2008