20 Court indicate that petitioners did not have an actual and honest objective to make a profit by continuing the ranching activity. We hold that petitioners have failed to prove that respondent's determination was in error. C. Section 6662(a)--Accuracy-Related Penalty Section 6662(a) and (b)(2) imposes a penalty of 20 percent of any part of the underpayment attributable to a substantial understatement of income tax. The understatement is substantial if it exceeds the greater of 10 percent of the proper tax or $5,000. Sec. 6662(d)(1)(A). The penalty will be reduced for any portion for which there was substantial authority for the position of the taxpayer, or where the relevant facts affecting the treatment of the item were adequately disclosed on the return. Sec. 6662(d)(2)(B). The standard for determining whether there is in fact substantial authority for a position is whether the weight of the authorities supporting that position is substantial in relation to the weight of authorities supporting contrary positions. Schirmer v. Commissioner, 89 T.C. 277, 283 (1987); sec. 1.6661-3, Income Tax Regs. On brief, petitioners referred to sections 162 and 183, which they assert allow for deductions for ordinary and necessary business expenses. They also point out that the Service has never challenged their business intent in prior years, despite similar positions, and therefore their reliance on the Service's position is warranted.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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