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underpayment attributable to a substantial understatement of tax.
Sec. 6661(a); Pallottini v. Commissioner, 90 T.C. 498, 500-503
(1988). A substantial understatement of income tax is defined as
an understatement of tax that exceeds the greater of 10 percent
of the tax required to be shown on the return for the year or
$5,000, whichever is greater. Sec. 6661(b)(1)(A). An
understatement is the amount required to be shown on the return
less the amount actually shown on the return. Sec.
6661(b)(2)(A). The Commissioner may waive the addition to tax if
the taxpayer had reasonable cause for the understatement and
acted in good faith. Sec. 6661(c). Petitioners bear the burden
of proving that respondent's imposition of additions to tax under
section 6661 is erroneous. Rule 142(a); Tweeddale v.
Commissioner, 92 T.C. 501, 506 (1989).
Petitioners did not address this issue in their brief, nor
did they present any evidence at trial which would prove that
they had reasonable cause for the understatement and acted in
good faith in omitting the income from their returns.
Accordingly, we sustain respondent's determination as to the
additions to tax under section 6661.
Addition to Tax for Failure To Timely File
Respondent determined that Mr. Gherman is liable for the
addition to tax imposed under section 6651(a)(1) for the year
ended 1988, because he failed to timely file his Federal income
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