Franklin W. Briggs - Page 49




                                       - 49 -                                         
         the proceeds from the sale of ACT’s assets on their individual               
         Federal income tax returns.                                                  
              Summary                                                                 
              For taxable years 1986, 1987, and 1988, petitioners are                 
         liable for the section 6653(b)(1) addition to tax solely as                  
         results from their fraudulent underreporting of the gas rebate               
         payments.                                                                    
          Issues 7 and 8.  Additions to Tax for Substantial Understatement            
              Respondent determined that the Morrises are liable for                  
         additions to tax pursuant to section 6661 for taxable years 1986             
         and 1987, and that Briggs is liable for section 6661 additions to            
         tax for taxable years 1986, 1987, and 1988.                                  
              Section 6661 imposes a 25-percent addition to tax on any                
         underpayment attributable to a substantial understatement of                 
         income tax.  A substantial understatement of tax is one that                 
         exceeds the greater of 10 percent of the tax required to be shown            
         on the return or $5,000.  See sec. 6661(b)(1)(A).  For this                  
         purpose, the amount of the understatement is to be reduced by the            
         portion attributable to any item for which there was substantial             
         authority or any item that was adequately disclosed.  See sec.               
         6661(b)(2)(B).  In addition, the Commissioner may waive all or               
         part of a section 6661 addition to tax upon a showing by the                 
         taxpayer that there was reasonable cause for the understatement              
         and that the taxpayer acted in good faith.  See sec. 6661(c).                






Page:  Previous  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  54  Next

Last modified: May 25, 2011