-7-
"at or before the hearing or a rehearing." We may not, however,
determine a greater deficiency where respondent has not pleaded
an increased deficiency. Moise v. Burnet, 52 F.2d 1071, 1073
(9th Cir. 1931), revg. 13 B.T.A. 525 (1928); Estate of Petschek
v. Commissioner, 81 T.C. 260, 271-272 (1983), affd. 738 F.2d 67
(2d Cir. 1984); Koufman v. Commissioner, 69 T.C. 473, 475-476
(1977).
In the instant case respondent has not specifically
addressed the issue and has not requested an increase in the
addition to tax under section 6661. In these circumstances we
cannot conclude that respondent has asserted a claim for the
increased amount as required by section 6214(a), nor that the
issue has been tried by consent of the parties within the meaning
of Rule 41(b)(1). Thus, we shall apply the addition, if
determined to be applicable, at the rate set forth in the notice
of deficiency.
Section 6661(a) provides that an addition to tax is imposed
on any underpayment attributable to a substantial understatement
of income tax. Petitioner bears the burden of proving that she
is not liable for this addition to tax. Rule 142(a); King's
Court Mobile Home Park, Inc. v. Commissioner, 98 T.C. 511, 517
(1992).
An understatement is substantial if it exceeds the greater
of 10 percent of the amount required to be shown on the return
for the taxable year or $5,000. Sec. 6661(b)(1). An
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