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light of the fact that most of petitioner's actions involve
managing and maintaining petitioner's rental properties.
Addition to Tax Under Section 6662(a)
The third issue for decision is whether petitioner
is subject to the accuracy-related penalty under section
6662(a). In the notice of deficiency, respondent
determined that the entire underpayment for each of the
years in issue is attributable to a substantial
understatement of income tax. See sec. 6662(b)(2). Thus,
in the notice of deficiency, respondent added 20 percent
of the underpayment to the tax determined with respect to
each of the years in issue. See sec. 6662(a).
Generally, there is a substantial understatement of
income tax for any taxable year 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 ($10,000 in the case of a corporation other than an
S corporation or a personal holding company). Sec.
6662(d)(1)(A). In this context, the term "understatement"
is defined to mean the excess of the amount of the tax
required to be shown on the return over the amount of the
tax imposed which is shown on the return, reduced by any
rebate. Sec. 6662(d)(2). In determining whether an
understatement is substantial, the amount of the
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