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substantial understatement of income tax. An understatement is
substantial if it exceeds the greater of 10 percent of the
correct tax or, in the case of a corporate taxpayer, $10,000.
If an item is not attributable to a tax shelter, then any
understatement may be reduced by amounts attributable to items
for which a taxpayer had substantial authority or which were
adequately disclosed in the return (e.g., by attaching a
statement thereto). Sec. 6661(b)(2)(B)(i) and (ii).
Petitioners have not shown that there was substantial
authority for their tax treatment of any of the adjustments
determined by respondent. In addition, we find that
petitioners did not adequately disclose any of the adjusted
items on the returns for the period in controversy.
Accordingly, to the extent that petitioners' understatement,
for any taxable period under consideration, is substantial
within the meaning of section 6661, petitioners are liable for
the addition to tax under section 6661. To reflect the
foregoing and to reflect concessions and agreements of the
parties,
Decisions will be entered
under Rule 155.
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