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OPINION
Petitioner now concedes that he failed to report $173,093 of
income from Windsor in 2001. We must decide whether he is liable
for a section 6662(a) accuracy-related penalty based on a
substantial understatement of income tax, as determined by
respondent. See sec. 6662(a) and (b)(2). A "substantial
understatement" exists for this purpose if the amount of tax
required to be shown on the return exceeds that shown by the
greater of 10 percent of the tax required to be shown or $5,000.
Sec. 6662(d)(1)(A).
The Commissioner has the burden of production under section
7491(c) with respect to the liability of any individual for a
penalty imposed by the Internal Revenue Code and must come
forward with sufficient evidence indicating that it is
appropriate to impose the penalty. See Higbee v. Commissioner,
116 T.C. 438, 446-447 (2001). Once the Commissioner meets his
burden of production, the taxpayer must come forward with
persuasive evidence that the Commissioner's determination as to
the penalties is incorrect or that the taxpayer had reasonable
cause or substantial authority for his position. See id. at 447;
sec. 1.6664-4, Income Tax Regs.
The $173,093 omission of income conceded by petitioner
produces an understatement exceeding the greater of $5,000 or 10
percent of the tax required to be shown on his return.
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