- 32 -
reduced penalty for understatement of tax. See Accardo v.
Commissioner, 942 F.2d 444, 453 (7th Cir. 1991), affg. 94 T.C. 96
(1990) (taxpayer's statement that his deduction of $207,000 was
for "Legal fees re conservation of property held for production
of income" falls short of the exposition of relevant facts
required under section 6661(b)(2)(B)(ii)); Schirmer v.
Commissioner, supra at 285-286 (mere listing of income, expenses
and claimed depreciation did not constitute disclosure of
relevant facts); see also Zdun v. Commissioner, T.C. Memo. 1998-
296 (“Reporting income actually earned as a dentist as income
earned from an apple orchard is misrepresentation, not
disclosure."); Lester v. Commissioner, T.C. Memo. 1995-317
(Taxpayers' use of the term "Financial Trading" in the title
portion of their Schedule C was not sufficient to frame the
controversy or to adequately disclose their position.); Myers v.
Commissioner, T.C. Memo. 1994-529 (Even if "COMMODITIES" was
adequate disclosure for deductions on Schedule C, the commodity
contract losses were deducted on Schedule F, which is completely
unrelated to petitioners' "disclosure" on Schedule C.)
Petitioners did not attach any disclosure statement to their
return, and they did not provide sufficient information for
respondent to identify the potential controversy on their return.
To the extent the Rule 155 computation indicates a substantial
understatement of petitioners' income tax within the meaning of
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