- 8 -
Accordingly, we hold that petitioners are required to
recognize the gain realized from the sale of the Sepulveda
property.5
Issue 2. Section 6662.
Respondent determined that petitioners are liable for the
accuracy-related penalty pursuant to section 6662(a). Section
6662 imposes a penalty equal to 20 percent of the portion of an
underpayment of tax that is attributable to any substantial
understatement of tax. Secs. 6662(a) and (b)(2). An
understatement of tax is substantial when it exceeds the greater
of 10 percent of the tax required to be shown on the return or
$5,000. Sec. 6662(d)(1)(A). The amount of an understatement
will be reduced if a taxpayer has substantial authority for the
way an item was treated, or if the facts that affect the item's
tax treatment are adequately disclosed on the return and there is
a reasonable basis for the tax treatment of such item. Sec.
6662(d)(2)(B). Moreover, the accuracy-related penalty does not
apply to any portion of an underpayment if there was reasonable
cause for such portion and the taxpayer acted in good faith.
Sec. 6664(c)(1). A taxpayer has the burden of proving that
respondent's determination is in error. Rule 142(a).
5We have considered each of petitioners' allegations with
respect to this issue and, to the extent not discussed herein,
find them to be irrelevant or without merit.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011