- 6 - that is actually shown on the return. Sec. 6662(d)(2)(A). An understatement is "substantial" if the amount exceeds the greater of 10 percent of the tax required to be shown on the return or $5,000. Sec. 6662(d)(1)(A). Petitioner's omission from his tax return of insurance renewal commissions in the amount of $113,081 results in a substantial understatement. Petitioner may avoid liability for the accuracy-related penalty in either of two ways. First, if there is or was substantial authority for petitioner's tax treatment of any portion of the understatement, that portion would be excluded from the penalty computation. Sec. 6662(d)(2)(B)(i). To determine whether the treatment is supported by substantial authority, the weight of the authorities in support of petitioner's position must be substantial in relation to the weight of the authorities supporting contrary positions. Antonides v. Commissioner, 91 T.C. 686, 700-704 (1988), affd. 893 F.2d 656 (4th Cir. 1990); sec. 1.6662-4(d)(3), Income Tax Regs. There are no authorities that support petitioner's treatment. Indeed, the weight of the authorities, discussed supra, clearly rejects petitioner's treatment of the renewal commissions. Thus, petitioner does not qualify under this exception. Second, petitioner's liability could be reduced if petitioner had adequately disclosed the relevant facts on his tax return and there was a reasonable basis for the treatment of thePage: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011