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In general, section 6662(a) imposes a penalty equal
to 20 percent of the portion of an underpayment of tax
which is attributable to one or more of the items listed
in section 6662(b), including any substantial understate-
ment of income tax. Sec. 6662(b)(2). For this purpose,
an understatement of tax is defined as the excess of the
amount of the tax which is required to be shown on the
return for the taxable year over the amount of the tax
which is shown on the return, reduced by any rebates.
Sec. 6662(d)(2)(A). In the case of a corporation, an
understatement is considered substantial if it exceeds
the greater of 10 percent of the tax required to be shown
on the return for the taxable year, or $10,000. Sec.
6662(d)(1).
Petitioner argues that the accuracy-related penalty
should not apply for the same two reasons that the fraud
penalty should not be imposed. Petitioner argues, first,
that it acted in good faith and with reasonable cause
because it relied on the advice of its accountants and,
second, that there is no underpayment of tax because
"(exclusive of the accounting charge issue) there were
actually more adjustments in Taxpayer's favor than
adjustments which would result in additional tax."
Petitioner does not cite the reasonable cause exception
contained in section 6664(c)(1), but its argument that
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