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Sec. 6661(b)(1)(A). Except for items attributable to tax shel-
ters, the amount of the understatement is reduced by items with
respect to which the taxpayer has or had substantial authority
for his or her position or for which relevant facts affecting the
tax treatment were adequately disclosed in his or her return.
Sec. 6661(b)(2)(B).
Petitioner has not attempted to show that there is substan-
tial authority for the items contributing to the understatement
at issue or that the facts establishing the tax treatment of
those items were adequately disclosed. His only position is that
he did not have an understatement for 1986 because he obtained
the funds that he transferred to C & I during that year from
third parties as loans, and, consequently, those funds are not
income to him.
On the record before us, we have found that, except for
$23,800, petitioner has failed to establish error in respondent's
determination in the notice, as reduced by her concession on
brief, that he has unreported income for 1986. On that record,
we further find that, except for $29,05313 of the understatement
determined in the notice with respect to which respondent deter-
mined the addition to tax under section 6661(a), petitioner has
13 This amount is the total of (1) $23,800 that petitioner
showed that he received from a nontaxable source during 1986 and
(2) $5,253 that respondent concedes on brief should reduce the
amount of unreported income for 1986 that she determined in the
notice pursuant to the cash expenditures method.
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