- 2 -
Addition to Tax Fraud Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6663
1990 $66,299 $3,315 $49,724
1991 52,593 - 0 - 39,445
Respondent also determined as an alternative to fraud that the
underpayments for 1990 and 1991 are subject to accuracy-related
penalties under section 6662(b)(1) and (2).
Respondent has conceded the addition to tax under section
6651(a)(1) for 1990 and the fraud penalties, and the parties have
reached agreement with respect to each adjustment determined in
the notice of deficiency. However, with certain exceptions2 the
parties dispute the applicability of the accuracy-related
penalties to the agreed adjustments. Thus the remaining issue
for decision is whether petitioner is liable for accuracy-related
penalties under section 6662(b)(1) and (2) with respect to the
underpayment arising from certain of the agreed-upon adjustments.
1(...continued)
indicated.
2On brief respondent concedes that the sec. 6662(b)(1)
penalty does not apply to the portion of the 1990 underpayment
attributable to an adjustment involving petitioner's
contributions to an individual retirement account and the portion
of the 1991 underpayment attributable to adjustments involving
Schedule C mortgage interest expenses. Respondent's position
regarding the sec. 6662(b)(2) penalty with respect to the
foregoing adjustments is not entirely clear. To the extent
respondent has not conceded these adjustments for purposes of
sec. 6662(b)(2), we find on the basis of the record in this case
that petitioner had reasonable cause under sec. 6664(c) with
respect thereto.
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