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registered or certified mail. Instead, they entrusted it to an
individual for delivery. Accordingly, petitioners must assume
the risk of nondelivery of their return to the IRS. Furthermore,
petitioners have not met their burden of proving that the late
filing was due to reasonable cause.
Accordingly, we hold that petitioners are liable for the
addition to tax under section 6651(a)(1).
Issue 4. Addition to Tax--Substantial Understatement of Income
Tax
Respondent has determined an addition to tax under section
6661(a) for substantial understatement of income tax for the year
at issue.
Section 6661(a) imposes an addition to tax on a substantial
understatement of income tax. The section provides that if there
is a substantial understatement of income tax, there shall be
added to the tax an amount equal to 25 percent of the amount of
any underpayment attributable to such understatement. Sec.
6661(a). The taxpayer bears the burden of proving that the
Commissioner's determination as to the addition to tax under
section 6661(a) is erroneous. Rule 142(a).
An understatement is substantial where it exceeds the
greater of 10 percent of the tax required to be shown on the
return or $5,000. Sec. 6661(b)(1)(A). An understatement is the
difference between the amount required to be shown on the return
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