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reasonable cause for understating their income on their returns
for 1990 or 1991, and respondent contends that the
understatements constitute negligence within the meaning of
section 6662(a)(1).
Section 6662(a) imposes a penalty in an amount equal to 20
percent of the underpayment of tax attributable to one or more of
the items set forth in section 6662(b). Respondent asserts that
the entire underpayment of petitioners’ tax was due to negligence
or intentional disregard of rules or regulations, sec.
6662(b)(1), and to a substantial understatement, sec. 6662(b)(2).
Petitioners bear the burden of proving that respondent's
determination is erroneous. Rule 142(a); Axelrod v.
Commissioner, 56 T.C. 248, 258-259 (1971).
“Negligence” includes a failure to make a reasonable attempt
to comply with the provisions of the internal revenue laws. Sec.
6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. “Disregard”
includes any careless, reckless, or intentional disregard of
rules or regulations. Sec. 6662(c); sec. 1.6662-3(b)(2), Income
Tax Regs. There is a substantial understatement of income tax if
the amount of the understatement for the taxable year exceeds the
greater of (1) 10 percent of the tax required to be shown on the
return or (2) $5,000. Sec. 6662(d)(1)(A). For purposes of
section 6662(d)(1), "understatement" is defined as the excess of
tax required to be shown on the return over the amount of tax
that is shown on the return reduced by any rebate within the
meaning of section 6211(b)(2). Sec. 6662(d)(2)(A). Any
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