Robert W. and Jennifer J. Fritz - Page 10

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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             

                                                  Decision will be entered            
                                             for respondent.                          

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