30
Commissioner, 73 T.C. 671, 675 (1980). Petitioners bear the
burden of proving that their reliance on professional advice was
reasonable. Rule 142(a); Freytag v. Commissioner, 89 T.C. 849,
888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S.
868 (1991).
Petitioners failed to explain why they did not report the
IBM tax payments for petitioner-husband for 1990 and 1991 or his
IBM severance payment in 1991, petitioner-wife's wages from A&P
for 1990, or their interest income for 1990 and 1991. See supra,
p. 2, note 1. Petitioners have not shown that their erroneous
claim that they had net operating loss carrybacks to 1987 and
1988 was not due to negligence. Pappas v. Commissioner, 78 T.C.
1078, 1092 (1982) (taxpayer negligently omitted income for 1976,
resulting in a net operating loss for 1976 which he carried back
to 1973; taxpayer liable for negligence for 1973 and 1976). We
hold that petitioners are liable for the addition to tax for
negligence for 1987 and 1988.
2. Substantial Understatement
Section 6661(a) imposes an addition to tax of 25 percent of
the amount of any underpayment attributable to a substantial
understatement of income tax in any taxable year. A substantial
understatement exists if in any year the amount of the
understatement exceeds the greater of 10 percent of the tax
required to be shown on the return or $5,000. Sec.
6661(b)(1)(A). An understatement is the amount required to be
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