Joseph J. James - Page 9

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          from the property held in cotenancy, even though he paid the full           
          amount of such expenses.5                                                   
          Additions to Tax--Substantial Understatement                                
               Section 6661(a) provides that if there is a substantial                
          understatement of income tax for any taxable year, there shall be           
          added to the tax an amount equal to 25 percent of the amount of             
          any underpayment attributable to such understatement.  Pallottini           
          v. Commissioner, 90 T.C. 498 (1988).  The amount of the                     
          understatement is equal to the excess of the amount of tax                  
          required to be shown on the return for the tax year, less the               
          amount of the tax shown on the return.  Woods v. Commissioner, 91           
          T.C. 88, 94 (1988).  An understatement is substantial if it                 
          exceeds the greater of 10 percent of the tax required to be shown           
          on the return for the taxable year, or $5,000.  Sec. 6661(b)(1).            
               Petitioner has not shown that he comes within any exception            
          to section 6661.  If, under a Rule 155 computation, the                     
          recomputed deficiency satisfies the statutory percentage or                 
          amount, petitioner will be liable for this addition to tax.                 
               To reflect the foregoing,                                              

               Petitioner's satisfaction of the full amount of the expenses           
          associated with the cotenancy properties no doubt conferred a               
          benefit on his cotenants in the nature of either income, a loan,            
          repayment of a loan, or a gift.  See Old Colony Trust Co. v.                
          Commissioner, 279 U.S. 716 (1929); Rev. Rul. 62-39, 1962-1 C.B.             
          17.  However, the record is void of any evidence that would                 
          enable us to decide which of the above classifications pertains             
          to the case before us, nor is such a decision necessary.                    

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