- -7
THE COURT: Well, but you must have had some understanding
of whether--if she remarried or if she died, you would
still have to pay this for a full forty-eight months.
THE WITNESS: I had that under--we never discussed
remarriage at all, but they said I'm going to have to pay this
for forty-eight months.
THE COURT: Whether she lived or died?
THE WITNESS: Yes.
The provision in the settlement agreement that the spousal
support was reportable by wife and deductible by husband is
merely an attempt to agree to a legal conclusion that is contrary
to the necessary legal conclusion following from the provision
for the payments to continue after petitioner's former wife's
death. An incorrect understanding of the law by the parties to
that agreement does not change the law applicable to petitioner's
case.
Also at issue is whether petitioners are liable for the
accuracy-related penalties under section 6662(a). Under section
6662, a 20-percent addition to tax is imposed on the portion of
the underpayment that is attributable to one or more of the
following: (1) Negligence or disregard of the rules or
regulations; (2) substantial understatement of tax; (3) valuation
overstatement; (4) overstatement of pension liabilities; and (5)
estate or gift tax valuation understatements. Respondent
concedes that only negligence and substantial understatement of
tax would have application to the facts in this case.
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