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year, the amount of the understatement exceeds the greater of 10
percent of the tax required to be shown on the return for the
taxable year or $5,000. Sec. 6661(b)(1)(A). Section 6661(a)
provides for an addition to tax equal to 25 percent of the amount
of any underpayment attributable to such understatement.
Pallottini v. Commissioner, 90 T.C. 498 (1988).
The understatement is reduced by that portion for which
there is "substantial authority" or that has been "adequately
disclosed". Sec. 6661(b)(2)(B). Petitioner did not disclose the
transaction at issue on his 1985 or 1986 Federal income tax
returns, so there could not have been adequate disclosure.
Moreover, to show that he had substantial authority, petitioner
must demonstrate that the substantial weight of authority
supports the positions taken on his income tax return. Sec.
1.6661-3(b)(1), Income Tax Regs.; see also Nestle Holdings, Inc.
v. Commissioner, T.C. Memo. 1995-441. Petitioner has not shown
this Court any authority for his tax positions. Furthermore,
opinions of tax professionals may not constitute such authority.
See, e.g., sec. 1.6661-3(b)(2), Income Tax Regs. In this case,
there was no “substantial authority”.
Section 6661(c) provides that the Secretary may waive this
penalty “on a showing by the taxpayer that there was reasonable
cause for the understatement * * * and that the taxpayer acted in
good faith.” The denial of a waiver under section 6661(c) is
reviewable by this Court, and the appropriate standard of review
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