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purposes, and we so find. We believe that petitioner was
negligent in not reporting the $408,318 on his 1987 return, and
we so find. We sustain respondent's additions to tax under
section 6653(a)(1)(A) and (B) in their entirety.
B. Substantial Understatement of Income Tax Liability
For returns due before January 1, 1990, section 6661
provides for an addition to tax equal to 25 percent of the amount
of any underpayment attributable to a substantial understatement.
An understatement is "substantial" when the understatement for
the taxable year exceeds the greater of (1) 10 percent of the tax
required to be shown or (2) $5,000. The understatement is
reduced to the extent that the taxpayer has (1) adequately
disclosed his or her position, or (2) has substantial authority
for the tax treatment of an item. Sec. 6661; sec. 1.6661-6(a),
Income Tax Regs. Petitioner bears the burden of proving that he
is not subject to the addition to tax determined by respondent.
Rule 142(a).
Petitioner’s understatement for the taxable year exceeded
10 percent of the tax required to be shown. It is therefore
substantial under section 6661. Petitioner argues, however, that
there was substantial authority for his treatment of the item.
Specifically, petitioner argues that he "reported the transaction
consistently with an award from the New York court and
consistently with the treatment of such item by the Lipsig Firm."
Section 1.6661-3(b)(2), Income Tax Regs., lists the types of
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