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B. Section 6661
Respondent also determined that petitioner substantially
understated his income tax liability and is liable for the
additions to tax under section 6661 for 1983 and 1985. The
amount of an addition to tax for a substantial understatement of
income tax for a taxable year, which addition is assessed after
October 21, 1986, equals 25 percent of the amount of any
underpayment attributable to such substantial understatement.
See 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. See sec. 6661(b)(1)(A).
Petitioner's understatement of income tax is substantial
according to section 6661(b)(1)(A). Petitioner had no authority
for his failure to report the understatement of income in 1983 or
1985, nor did petitioner disclose any facts pertaining to such
income on his 1983 and 1985 returns or in a statement attached to
his returns. Therefore, petitioner is liable for the section
6661 additions to tax.
V. Statute of Limitations
Petitioners timely made the returns here in question.
Respondent issued his notice of deficiency on May 22, 1997, more
than 3 years after the last of those returns was filed.
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