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and the prior inconsistent positions of respondent make any
penalty inappropriate.
Section 6662(a) imposes an accuracy-related penalty of 20
percent on any portion of an underpayment of tax that is
attributable to items set forth in section 6662(b). Section
6662(b)(2) specifies as one of those items “Any substantial
understatement of income tax.” An understatement is substantial
if it exceeds the greater of 10 percent of the amount of tax
required to be shown on the return or $5,000. Sec. 6662(d)(1)(A)
and (B). An understatement means the excess of the amount of the
tax required to be shown on a return over the amount of tax
imposed which is shown on the return, reduced by any rebate
(within the meaning of section 6211(b)(2)). Sec. 6662(d)(2)(A).
An understatement is reduced to the extent it is (1) based
on substantial authority or (2) adequately disclosed in the
return or in a statement attached to the return. Sec.
6662(d)(2)(B). To determine whether the treatment of any portion
of an understatement is supported by substantial authority, the
weight of authorities in support of the taxpayer’s position must
be substantial in relation to the weight of authorities
supporting contrary positions. Antonides v. Commissioner, 91
T.C. 686, 700-704 (1988), affd. 893 F.2d 656 (4th Cir. 1990);
sec. 1.6662-4(d)(3), Income Tax Regs.
Furthermore, the accuracy-related penalty under section
6662(b)(2) does not apply with respect to any portion of an
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Last modified: May 25, 2011