- 14 -
substantial because it exceeds the greater of $5,000 or 10
percent of the amount required to be shown on the return
($1,373.50). Petitioner has not shown that the understatement is
reduced under section 6661(b)(2). We, accordingly, sustain
respondent's determination of this addition.
Section 6661(c) provides that respondent "may" waive all or
any part of the addition to tax under section 6661(a) upon a
showing by petitioner that there was reasonable cause for the
understatement (or a part thereof) and that petitioner acted in
good faith. There is no evidence that a waiver was requested or
denied in this case. Even if we were to assume that a waiver had
been requested, respondent's refusal to grant one is reviewable
only for abuse of discretion. Mailman v. Commissioner, 91 T.C.
1079, 1084 (1988). Based upon our holding that petitioner's
reliance on his accountant in claiming the deduction and credit
with respect to the Ridge Energy investment was not reasonable,
we likewise hold that any failure by respondent to grant a waiver
based on petitioner's reliance would not constitute an abuse of
discretion.
To reflect the foregoing,
Decision will be entered
for respondent.
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