D. Sam Scheele - Page 12

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             the 7.5-percent payment to Weisel (or the Weisel payment to                                          
             petitioner) was in consideration for any settlement by petitioner                                    
             of a claim for damages on account of personal injuries.                                              

             II.  Section 6662 Penalty                                                                            
                    Section 6662(a) imposes a penalty in the amount of                                            
             20 percent of any portion of an underpayment of tax required to                                      
             be shown on a return that is attributable to one or more factors                                     
             listed in section 6662(b).  Those factors include negligence or                                      
             disregard of rules or regulations and any substantial                                                
             understatement of income tax.  The term “negligence” includes                                        
             “any failure to make a reasonable attempt to comply with the                                         
             provisions” of the Code, and the term “disregard” includes “any                                      
             careless, reckless, or intentional disregard.”  Sec. 6662(c).                                        
             Section 6662(d)(1)(A) provides that there is a substantial                                           
             understatement of income tax if the amount of the understatement                                     
             exceeds the greater of 10 percent of the tax required to be shown                                    
             on the return for the taxable year or $5,000.  Petitioner has the                                    
             burden of proving that respondent’s determination under section                                      
             6662(a) is incorrect.  Rule 142(a).                                                                  
                    Petitioner has failed to submit any evidence or argument                                      
             with respect to respondent's determination that petitioner is                                        
             liable for the penalty pursuant to section 6662(a), except for                                       

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Last modified: May 25, 2011