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492; Emmons v. Commissioner, 92 T.C. 342, 349 (1989), affd. on
other grounds 898 F.2d 50 (5th Cir. 1990); Eyefull Inc. v.
Commissioner, T.C. Memo. 1996-238; Ellwest Stereo Theatres v.
Commissioner, T.C. Memo. 1995-610. Petitioners' failure to
comply with filing deadlines created underpayments for each of
the years at issue equal to the amount of tax due. Since they
were unable to show reasonable cause for the delinquencies, it
follows that the underpayment for each year was attributable to
negligence.4
3. Section 6661
Section 6661 imposes an addition to tax equal to 25 percent
of the amount of any underpayment attributable to a substantial
understatement of tax. Sec. 6661(a). An understatement is
substantial if 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). The understatement is reduced by any portion
attributable to: (1) The tax treatment of an item for which the
taxpayer had substantial authority, or (2) an item with respect
to which the relevant facts affecting the item's tax treatment
are adequately disclosed in the return or in a statement attached
to the return. Sec. 6661(b)(2)(B). Respondent is authorized to
4Our disposition of the negligence issue obviates the need
to consider petitioners' contention that they were not negligent
with respect to the substantive errors on their tax returns
because they relied reasonably and in good faith on professional
advice.
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