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The final issue for decision is whether petitioners are
liable for additions to tax for 1985 and 1987 under section 6661.
Section 6661(a) provides for an addition to tax equal to 25
percent of the amount of any underpayment attributable to a
substantial understatement of income tax. Pallottini v.
Commissioner, 90 T.C. 498, 503 (1988). An understatement is
substantial if it exceeds the greater of $5,000 or 10 percent of
the tax required to be shown on the return. Sec. 6661(b)(1)(A).
However, the amount of the understatement may be reduced under
section 6661(b)(2)(B) for amounts adequately disclosed or
supported by substantial authority. Petitioners have not
addressed this issue on brief, nor have they presented any
evidence that would bring them within the safe harbor provisions
of section 6661(b)(2)(B). Accordingly, we sustain respondent's
determination.
Decision will be entered
for respondent.
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