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therefor. Accordingly, we find petitioners liable for the
addition to tax under section 6651(a)(1).
Respondent also determined that petitioners are liable for
the accuracy-related penalty for substantial understatement of
tax under section 6662(b)(2). In this regard, petitioners have
not provided substantial authority for the positions taken on
their return. In fact, Mrs. Emmons testified that the accountant
who prepared the return informed her that the foreclosure
transactions resulted in taxable gain to petitioners and that she
nonetheless insisted that the return be prepared showing losses
on these transactions. Furthermore, petitioners did not make
disclosures within the meaning of section 6662(d)(2)(B)(ii).
Therefore, due to the concessions made by the parties and the
findings herein, the penalty will be sustained in the event the
Rule 155 computation indicates that petitioners' understatement
of tax exceeds the greater of $5,000 or 10 percent of the amount
of tax required to be shown on the return.
To reflect the foregoing and concessions,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011