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owed on an amount arrived at by excluding the disclosed item and
adding to the reported income those items to which the addition
to tax would apply. The Court of Appeals for the Tenth Circuit
applied the test outlined in Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., supra, found section
6661(b)(2)(B) ambiguous as to how to compute the portion of the
understatement which is attributable to disclosed items, and
upheld the regulation as a reasonable construction of section
6661.
We are satisfied that the ordering principles in section
1.6664-3, Income Tax Regs., are a reasonable interpretation of
how to compute the portion of the underpayment which is
attributable to negligence.
Decision will be entered in
accordance with respondent's Rule
155 computation.
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