S. Victoria Wells - Page 13

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          that petitioner owned and sold the property.  Having had the                
          advantages of ownership of the Paddock Lane property, we find it            
          inapposite for petitioner to deny the form of the transaction.              
          We hold, in accord with California law, that petitioner was the             
          sole owner of the Paddock Lane property at the time of its sale.            
               We next consider whether petitioner is liable for the                  
          accuracy-related penalty for substantially understating her                 
          income tax.  Sec. 6662(b)(2).  A substantial understatement is              
          one that exceeds the greater of 10 percent of the tax required to           
          be shown or $5,000 (in the case of an individual taxpayer).  Sec.           
          6662(d)(1).  Any understatement is to be reduced by an item for             
          which there is substantial authority for its tax treatment or               
          adequate disclosure.                                                        
               Petitioner's failure to report the entire gain from the sale           
          of the Paddock Lane property resulted in a $150,027 understate-             
          ment of income tax.  This amount is in excess of $5,000, and it             
          exceeds 10 percent of the amount of tax required to be shown on             
          the return.  Petitioner has failed to show substantial authority            
          in support of her position that the Paddock Lane property should            
          be deemed community property and that the gain should be divided            
          between petitioner and her ex-husband.                                      
               Section 6662(d)(2)(B)(ii) defines a disclosed item as one as           
          to which "the relevant facts affecting the item's tax treatment             
          are adequately disclosed in the return or in a statement attached           

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