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control test excludes consideration of what happens to income
after it flows from a taxpayer's hands. Ianniello v.
Commissioner, supra.
In the instant case, it is evident that petitioner had
dominion and control over the misappropriated funds. As
discussed above, the restitution provision contained in
petitioner's plea agreement does not alter the consequence of
this finding. Accordingly, there remains no genuine issue as to
any material fact with respect to whether such misappropriated
funds should be included in petitioner's gross income for taxable
year 1991.4
We turn now to the penalty determined by respondent pursuant
to section 6662(a). Section 6662(a) imposes an accuracy-related
penalty in an amount equal to 20 percent of the underpayment of
tax attributable to one or more of the items set forth in section
6662(b). Respondent determined the section 6662(a) penalty on
the grounds that petitioner's underpayment is a "substantial
understatement." See sec. 6662(b)(2). The term "understatement"
means the excess of the amount of tax required to be shown on a
return over the amount of tax imposed which is shown on the
return, reduced by any rebate (within the meaning of section
6211(b)(2)). Sec. 6662(d)(2)(A). An understatement is a
"substantial understatement" when the understatement exceeds the
4The deductibility of any restitution paid by petitioner is
an issue not before us in the present proceeding.
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