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(b)(2). Respondent based the determination of the section
6662(a) penalty on petitioners' underpayment being due to a
substantial understatement. See sec. 6662(b)(2). Section
6662(d)(1)(A) treats an understatement as substantial when it
exceeds the greater of $5,000 or 10 percent of the amount of tax
required to be shown on the return. The understatement is
reduced for purposes of section 6662(d)(1)(A) by that portion of
the understatement which is attributable to the tax treatment of
any item (1) if there is or was substantial authority for such
treatment or (2) if the relevant facts affecting the item's tax
treatment are adequately disclosed in the return or in a
statement attached to the return. Sec. 6662(d)(2)(B).
To determine whether the treatment of any portion of an
understatement is supported by substantial authority, we must
consider whether the weight of authorities in support of the
taxpayer's position is substantial in relation to the weight of
authorities supporting contrary positions. Norgaard v.
Commissioner, 939 F.2d 874 (9th Cir. 1991), affg. in part and
revg. in part T.C. Memo. 1989-390; Antonides v. Commissioner, 91
T.C. 686, 702-703 (1988), affd. 893 F.2d 656 (4th Cir. 1990);
sec. 1.6662-4(d)(3), Income Tax Regs.
With respect to the penalty under section 6662, the burden
of proof is on petitioners. Rule 142(a). Petitioners do not
argue that they had substantial authority for their position.
Rather, they argue that the penalty should not apply because they
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