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Issue 3. Additions to Tax Under Section 6661.
Respondent determined that petitioner is liable for the
addition to tax pursuant to section 6661 for taxable years 1982
through 1986 due to a substantial understatement of income tax
for such taxable years. This determination is benefited by a
presumption of correctness. Rule 142(a). A substantial
understatement is one that exceeds the greater of 10 percent of
the tax required to be shown on the return, or $5,000. Sec.
6661(b)(1). If a taxpayer has substantial authority for the tax
treatment of any item on the return, the understatement is
reduced by the amount attributable to such authority. Sec.
6661(b)(2)(B)(i). Similarly, the amount of the understatement is
reduced for any item adequately disclosed either on the
taxpayer's return or in a statement attached to the return. Sec.
6661(b)(2)(B)(ii).
Petitioner concedes that he is not entitled to an adjustment
pursuant to section 6661(b)(2)(B) for any taxable year at issue.
Accordingly, if, after performing the Rule 155 computation,
petitioner's understatement in tax for any year at issue is
"substantial," as defined by section 6661(b)(1), then the
addition to tax under section 6661 will apply to that year.
Issue 4. Statute of Limitations.
Respondent has established fraud against petitioner for
taxable years 1980 through 1984. Accordingly, the period of
limitations for assessment and collection of the tax remains open
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