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understated his Federal income tax for that year. See sec.
6662(b)(2).
As relevant herein, section 6662(a) imposes an accuracy-
related penalty equal to 20-percent of an underpayment that is
due to a substantial understatement of income tax. See sec.
6662(d). An individual substantially understates his or her
income tax when the reported tax is understated by the greater of
10-percent of the tax required to be shown on the return or
$5,000. Sec. 6662(d)(1)(A). Tax is not understated to the
extent that the treatment of the item related thereto is based on
substantial authority or is adequately disclosed in the return or
in a statement attached to the return. Sec. 6662(d)(2)(B).
However, in the case of a tax shelter, (1) adequate disclosure
will not serve to avoid the penalty, and (2) substantial
authority will avoid the penalty only if the taxpayer reasonably
believed that the tax treatment of the item by the taxpayer was
more likely than not the proper treatment. Sec. 6662(d)(2)(C).
Petitioner reported zero tax on his 1989 return. The
correct amount due, as stipulated by the parties, was $34,823.
Therefore, petitioner understated his income tax in an amount
greater than $5,000 or 10-percent of the tax required to be shown
on his return.
Petitioner makes no argument with regard to substantial
authority or adequate disclosure, and we think that no such
argument can be persuasively made. Moreover, for the reasons
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