Unpublished Disposition, 937 F.2d 611 (9th Cir. 1984)

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U.S. Court of Appeals for the Ninth Circuit - 937 F.2d 611 (9th Cir. 1984)

Doris H. CHOU, Jack C. Chou, Petitioners-Appellants,v.COMMISSIONER INTERNAL REVENUE SERVICE, Respondent-Appellee.

No. 90-70331.

United States Court of Appeals, Ninth Circuit.

Submitted July 11, 1991.* Decided July 15, 1991.

Before POOLE, KOZINSKI and LEAVY, Circuit Judges.


Petitioners appeal the Tax Court's determination of the fair market value of a carved opal they donated to the American Museum of Natural History. They also challenge various penalties imposed by the Commissioner.

We review the Tax Court's fair market value determination for clear error. Sammons v. Commissioner, 838 F2d 330, 333 (9th Cir 1988). We find none here as the Tax Court based its finding on the testimony of the Commissioner's two highly qualified expert witnesses. See Helvering v National Grocery Co., 304 US 282, 295 (1938) (the Tax Court may accept or reject expert testimony as it deems appropriate).

We review for clear error the Tax Court's finding that taxpayers are liable for a negligence penalty under Section 6653(a). Collins v Commissioner, 857 F2d 1383, 1386 (9th Cir 1988). The Tax Court pointed out that taxpayers are experienced gem collectors and inferred that they either knew or could have easily determined that the stone was not worth what they claimed on their tax return. Also, taxpayers claimed a value for the opal that was over ten times what they insured it for when they shipped it to the museum. Accordingly, the Tax Court did not clearly err in finding taxpayers liable for the negligence penalty.

The overvaluation penalty was proper pursuant to Section 6659. Taxpayers claimed a value of $292,875 for an opal the Tax Court determined was worth $27,755--an overvaluation of $265,120 or 1,055 percent. The Section 6621 interest rate penalty for engaging in a tax motivated transaction was also proper; a section 6659 valuation overstatement is explicitly listed as a tax motivated transaction in section 6621(c) (3) (A) (i).

Section 6659(f) is irrelevant because it was enacted in 1984 and applies to returns filed after December 31, 1984, Tax Reform Act of 1984, Pub L No 98-369, Sec. 155(d) (2), 98 Stat 695 (1984); taxpayers' return was filed in 1983.



The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a); 9th Cir.R. 34-4


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3