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1983 and 1984, section 6661(a) imposes an addition to tax equal
to 10 percent of the underpayment attributable to the
understatement for that year. An understatement is substantial
if it exceeds the greater of 10 percent of the tax required to be
shown or $5,000. Sec. 6661(b)(1)(A). An "understatement" is
defined as the excess of the tax required to be shown on the
return over the tax actually shown on the return, but the
understatement is reduced if and to the extent that the taxpayer
either had substantial authority for, or adequately disclosed,
the tax treatment shown on the return. Sec. 6661(b)(2).
Respondent's determination of the addition is presumed to be
correct, and petitioner bears the burden of proving that he is
not liable for the addition. Rule 142(a).
If the taxpayer shows that there was reasonable cause for
the understatement and that he acted in good faith, the Secretary
may waive all or any part of the addition to tax under section
6661(a). Sec. 6661(c). In this Court, the taxpayer must prove
that the Secretary abused his discretion by denying the waiver of
the section 6661(a) addition to tax. Mailman v. Commissioner, 91
T.C. 1079, 1083-1084 (1988). To carry this burden petitioner
must show (I) that he requested a waiver under section 6661(c),
Klieger v. Commissioner, T.C. Memo. 1992-734, (ii) that
respondent refused the request, id., and (iii) that respondent's
refusal to waive the addition to tax was arbitrary, capricious,
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