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failed to carry his burden, we uphold respondent's disallowance
of these expenses.
III. Accuracy-Related Penalty under Section 6662(a)
Respondent determined an accuracy-related penalty under
section 6662(a) in the amount of $6,921. Section 6662(a) imposes
an accuracy-related penalty of 20 percent on any portion of an
underpayment of tax that is attributable to items set forth in
section 6662(b). Section 6662(b)(2) applies section 6662(a) to
any portion of an underpayment attributable to a substantial
understatement of income tax. There is a substantial
understatement of income tax if the amount of the understatement
exceeds the greater of 10 percent of the tax required to be shown
on the return for the taxable year, or $5,000. See Sec.
6662(d)(1)(A). Under section 6662(d)(2), the term
"understatement" means the excess of the amount of tax required
to be shown on the return over the amount of tax shown on the
return, reduced by any rebate (within the meaning of section
6211(b)(2)). Respondent’s determination that there is an
accuracy-related penalty due from petitioner under section
6662(a) for the 1994 taxable year is sustained.
To reflect the foregoing,
Decision will be
entered for respondent.
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