- 43 -
underpayment attributable to such understatement. Pallottini v.
Commissioner, 90 T.C. 498 (1988). This amount may be reduced if
the taxpayer shows that there was substantial authority for his
treatment of an item, or that the relevant facts affecting the
tax treatment of the item are adequately disclosed on the return
or in a separate statement attached to the return. Sec.
6661(b)(2)(B); secs. 1.6661-3, 1.6661-4, Income Tax Regs.
Petitioners disclosed on Form 8082 that petitioner was
treating the disposition of the Mall in a manner inconsistent
with the treatment by Pecaris and his Pecaris partners. Although
petitioners' Form 8082 did not apprise respondent of the exact
nature of the controversy, petitioners' disclosure on their
return for respondent flagged their omission from their 1988
gross income of $827,968--the amount of respondent's adjustment.
See Schirmer v. Commissioner, 89 T.C. 277, 285-286 (1987) (citing
S. Rept. 97-494, at 274 (1982)). We reject respondent's
imposition of the section 6661 substantial understatement
addition.
To reflect the foregoing,
Decision will be entered
for respondent with respect to
the determined deficiency and
for petitioners with respect to
the additions to tax.
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Last modified: May 25, 2011