Michael E. and Nancy Hentges - Page 14

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          shown on the return over the amount of tax that is shown on the             
          return, reduced by any rebates.  Sec. 6662(d)(2)(A).                        
               Section 6662(d)(2)(B) provides that the amount of the                  
          understatement shall be reduced by that portion of the                      
          understatement that is attributable to the tax treatment of any             
          item by the taxpayer if there is or was substantial authority for           
          the treatment, or any item with respect to which the relevant               
          facts affecting the item's tax treatment are adequately disclosed           
          in the return or in a statement attached to the return, and there           
          is reasonable basis for such treatment.                                     
               Petitioners did not establish that any of the exonerating              
          provisions of section 6662 or section 6664(c) would apply to                
          reduce the amount of, or extinguish the existence of, a                     
          substantial understatement of income tax for 1992.  Moreover,               
          petitioners conceded the underpayment of tax attributable to                
          their failure to report the IRA distribution on their 1992                  
          return.  Respondent, therefore, is sustained on the section                 
          6662(a) penalty.                                                            


          Decision will be entered                                                    
          for respondent.                                                             










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