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F. Substantial Understatement
The next issue for decision is whether petitioner is liable
for the addition to tax for substantial understatement of income
tax under section 6661(a) for fiscal years 1987 and 1988.
Section 6661(a) imposes an addition to tax equal to 25 percent of
the amount of any underpayment attributable to a substantial
understatement of income tax.
If a taxpayer has substantial authority for the tax
treatment of any item on the return, the understatement is
reduced by the amount attributable to it. Sec. 6661(b)(2)(B)(i).
Similarly, the amount of the understatement is reduced for any
item adequately disclosed either on the taxpayer's return or in a
statement attached to the return. Sec. 6661(b)(2)(B)(ii).
Petitioner bears the burden of proving that the addition to tax
under section 6661 does not apply. Rule 142(a); Tweeddale v.
Commissioner, 92 T.C. 501, 506 (1989).
Petitioner has offered no evidence or argument that it is
not liable for the addition to tax under section 6661(a). We
conclude that petitioner is liable for the section 6661(a)
addition to tax for fiscal years 1987 and 1988.
Decision will be entered
for respondent.
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