- 49 -
years are substantial because they are necessarily greater than
10 percent, and they both exceed $5,000. Woods v. Commissioner,
supra at 95. As discussed supra under Issue 1 of this opinion,
we have recalculated the understatements based upon the evidence
presented by petitioner rebutting respondent's initially
determined deficiency determinations.
The underpayment against which the statute calculates the 25
percent addition is the understatement net of any prepayment
credits, which in this situation is the withholding paid in each
of the two years. Id. at 99. The amount of the underpayment may
be further reduced by the portion attributable to the tax
treatment of any item if there was substantial authority for such
treatment (a reduction for items that were adequately disclosed
on the return or in a statement attached to the return is not
applicable because no returns were filed). Sec. 6661(b)(2)(B).
Petitioner has failed to present any evidence or argument for a
reduction under section 6661. We therefore hold him liable for
the additions to tax for substantial understatement for both
years on the full amounts of the understatements. See Bard v.
Commissioner, T.C. Memo. 1993-105.
c. Failure to pay estimated tax--section 6654
Respondent determined an addition to tax under section
6654(a) for petitioner's failure to pay estimated income tax.
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