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status, (B) his stated ability to open his own office and deal as
any other broker does, * * * Groetzinger did apply to Mr. Kelly's
option trading activities as an ROP". (Emphasis added.) However,
Mr. Kelly has not shown by his own testimony or otherwise that
his status as a registered options principal in fact entitled him
to open his own office and deal in options. Thus he has not
satisfied his burden of showing that he provided his accountant
with complete and accurate information on this material point.
We therefore reject Mr. Kelly's claim of reliance on his
accountant. The additions to tax under section 6653(a) are
accordingly sustained.
Respondent further determined that petitioners are liable
for the additions to tax under section 6661. Section 6661
imposes an addition to tax equal to 25 percent of the amount of
any underpayment attributable to a substantial understatement of
income tax. An understatement is substantial if it exceeds the
greater of 10 percent of the tax required to be shown on the
return or $5,000. Sec. 6661(a) and (b)(1). The amount of the
understatement is reduced by that portion which is attributable
to: (1) The tax treatment of any item for which there was
substantial authority, or (2) any item with respect to which the
relevant facts affecting the item's tax treatment are adequately
disclosed in the return or in a statement attached to the return.
Sec. 6661(b)(2)(B).
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