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and maintain that by filing late, they were merely deferring
receipt of their tax refund. Thus, we sustain the addition to
tax.
Section 6661
Section 6661(a) provides for an addition to tax equal to 25
percent of the amount of any underpayment which is attributable
to a substantial understatement of income tax. The amount of the
understatement is equal to the excess of the amount of tax that
is required to be shown on the return for the taxable year over
the amount of the tax actually shown on the return. Woods v.
Commissioner, 91 T.C. 88, 94 (1988). An understatement is
"substantial" when it exceeds the greater of 10 percent of the
tax which is required to be shown on the return or $5,000. Sec.
6661(b)(1). However, the amount of the understatement may be
reduced for amounts that the taxpayer adequately discloses or
supports with substantial authority. Sec. 6661(b)(2)(B);
Mitchell v. Commissioner, T.C. Memo. 1994-242. Petitioners have
failed to present any argument or evidence regarding the
applicability of either exception. Rather, they contend that no
understatement exists. Accordingly, we sustain the addition to
tax.
Decision will be entered
under Rule 155.
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