- 42 -
are not subject to liability under that provision for two
reasons. First, petitioners argue that the amount of the
"understatement" should be reduced by the entire under-
statement because petitioners satisfied the substantial
authority and reasonable belief requirements of section
6661(b)(2)(B) and (C). To establish substantial authority
and reasonable belief, petitioners rely on the same
arguments, summarized above, that they advanced to show
that they are not liable for the negligence additions under
section 6653(a)(1) and (2). Second, petitioners maintain
that they meet the standards for waiver of the addition to
tax under section 6661(c), which provides that the
Secretary may waive all or any part of the section 6661
addition if the taxpayers prove that there was reasonable
cause for the understatement and they acted in good faith.
Finally, as to the additions to tax under both
sections 6653(a) and 6661, petitioners argue that the Court
should vacate those portions of our opinion relating to
additions to tax under sections 6653(a) and 6661 because
the Court's holding that the investment did not have
economic substance was based upon the novel theory that
petitioners acquired a limited or partial interest, rather
than an entire ownership interest, in the computer
equipment.
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