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agrees to represent a client for compensation determined as a
percentage of the amount recovered. Black’s Law Dictionary 614
(6th ed. 1990). We find that the $390,735 additional amount was
a contingent fee.
We conclude that petitioner is not entitled to exclude any
of the attorney’s fee from income whether paid under FEHA’s fee-
shifting statute or on a contingent fee basis.
IV. Accuracy-Related Penalty
We next consider whether petitioner is liable for the
accuracy-related penalty under section 6662(a). Respondent
argues that the accuracy-related penalty should apply
to the $393,862 underpayment of income tax attributable to
$994,602 of the jury award that petitioner incorrectly excluded
from income. Respondent has the burden of production under
section 7491(c) and must come forward with sufficient evidence
that it is appropriate to impose the accuracy-related penalty.
See Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001).
A taxpayer is liable for an accuracy-related penalty for any
portion of an underpayment attributable to, among other things, a
substantial understatement of income tax. Sec. 6662(a) and (b).
There is a substantial understatement of income tax under section
6662(b)(2) if the amount of the understatement exceeds the
greater of either 10 percent of the tax required to be shown on
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