- 26 -
substantial understatement as an understatement of income tax for
the taxable year that exceeds the greater of 10 percent of the
tax required to be shown or $5,000. Sec. 6662(d)(1). We have
sustained respondent’s determinations of adjustments to
petitioner’s income in their entirety in each of the tax years in
question; petitioner’s understatement of tax exceeds $5,000 and
10 percent of the tax required to be shown on his return.
Respondent is foreclosed from imposing the accuracy-related
penalty if a taxpayer has substantial authority for the treatment
of the items at issue or if the taxpayer adequately disclosed
such items. Sec. 6662(d)(2)(B)(i) and (ii). Petitioner has the
burden of showing either that he had substantial authority for
the tax treatment of the tax certificate interest or that he
adequately disclosed his treatment on the returns for each year
in issue. Rule 142(a).
The substantial authority standard is “an objective standard
involving an analysis of the law and application of the law to
relevant facts. The substantial authority standard is less
stringent than the `more likely than not’ standard, * * * but
12(...continued)
(A) the amount shown as the tax by the
taxpayer on his return, plus
(B) amounts not so shown previously
assessed (or collected without assessment),
over
(2) the amount of rebates made.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011