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Respondent has authority to waive this addition to tax, if the
taxpayer shows there was reasonable cause for the understatement
and the taxpayer acted in good faith. Sec. 6661(c).
Petitioners bear the burden of proving that imposition of
the addition to tax under section 6661 is erroneous. Rule
142(a); Tweeddale v. Commissioner, 92 T.C. 501, 506 (1989).
a. The Wises
The Wises substantially understated their income tax for
1988. Although distinguishable on its facts, Selfe v. United
States, 778 F.2d 769 (11th Cir. 1985), is substantial authority
for petitioners' claim to increase their bases because Wise and
Eicher guaranteed the HMC loan. However, they have not shown
that they (1) had other substantial authority for the other
positions taken on their tax return, (2) adequately disclosed
their position on the tax return or in a statement attached to
the tax return, (3) had reasonable cause for the understatement,
or (4) acted in good faith. The Wises have failed to carry their
burden of proof. We agree with respondent on this issue except
for petitioners' increased basis for the HMC loan.
b. Eicher
Eicher may reduce the amount of the understatement because
of his reliance on Selfe v. United States, supra. To the extent
Eicher has otherwise substantially understated his income tax for
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