Albert Lemishow - Page 1

                                   110 T.C. No. 26                                    

                               UNITED STATES TAX COURT                                

                           ALBERT LEMISHOW, Petitioner v.                             
                    COMMISSIONER OF INTERNAL REVENUE, Respondent*                     

               Docket No. 18744-96.               Filed June 2, 1998.                 

                    P is liable for the accuracy-related penalty on                   
               that portion of the underpayment attributable to the                   
               negligent omission of $102,519 of the total unreported                 
               income.  In determining the amount to which the penalty                
               is applied, R first calculated the total underpayment.                 
               R then calculated the underpayment excluding the                       
               "negligent" income.  R then imposed the penalty on the                 
               difference.  P calculated the underpayment of tax                      
               attributable to negligence by adding the $102,519 to                   
               the reported income and applying the penalty to that                   
               amount.  Held, R's method of computing the penalty is                  

               J. Dudley B. Kimball, for petitioner.                                  
               Mark L. Hulse and Laurence D. Ziegler, for respondent.                 

          This supplements Lemishow v. Commissioner, 110 T.C. 110                     

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