Joseph and Annie Chu - Page 10

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          the interest was not taxable to them because they did not own the           
          Liu accounts.                                                               
               Respondent also determined that petitioners were liable for            
          the following penalties under section 6662(a):  (1) Substantial             
          understatement (1990) and (2) negligence (1991).  Section 6662(a)           
          imposes an accuracy-related penalty equal to 20 percent of the              
          portion of an underpayment that is attributable either to                   
          negligence or to a substantial understatement of tax.  See also             
          sec. 6662(b)(1) and (2).                                                    
               Petitioners contend that neither of these penalties applies            
          to this case because they did not have a deficiency in either               
          year.  We have sustained respondent's determinations of the                 
          deficiencies.  The record does not otherwise disprove                       
          respondent's determination as to these penalties.  We also                  
          sustain her determination of them.                                          
                                                                                     
               With respect to each issue in this case, we have considered            
          all arguments made by petitioners, and, to the extent not                   
          addressed above, find them to be irrelevant or without merit.               
               To reflect the foregoing,                                              
                                                  Decisions will be                   
                                             entered under Rule 155.                  









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