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understatement is one which exceeds the greater of 10 percent of
the tax required to be shown on the return, or $5,000. Sec.
6661(b)(1). Accordingly, because the understatement for taxable
year 1988 is not subject to reduction pursuant to section
6661(b)(2)(B)(i) or (ii), respondent's determination as to this
issue is sustained.
Issue 6. Accuracy-Related Penalty, Sec. 6662
Respondent determined that petitioners are liable for the
penalty pursuant to section 6662 for taxable year 1989 because
the underpayment of income tax was attributable to negligence or
disregard of rules or regulations as well as to a substantial
understatement of income tax. Petitioners disagree and claim
that all disallowed deductions are based on substantial
authority.
Section 6662(a) provides that the taxpayers are liable for a
penalty equal to 20 percent of the portion of the underpayment to
which section 6662 applies. Section 6662(b)(2) provides that
section 6662 applies to an underpayment attributable to any
substantial understatement of income tax. A substantial
understatement of income tax occurs when the amount of the
understatement for the taxable year exceeds the greater of 10
percent of the tax required to be shown on the return, or $5,000.
Sec. 6662(d)(1)(A).
Petitioners bear the burden of rebutting respondent's
determination. Rule 142(a). Petitioners have offered nothing in
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