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the deficiencies determined by respondent must be reduced by the
appropriate amounts in the Rule 155 computations required in this
case.2
The final issue for decision is whether petitioner is liable
for accuracy-related penalties for negligence under section
6662(a). Section 6662(a) imposes a 20-percent penalty on the
portion of an underpayment attributable to any one of various
factors, one of which is negligence or disregard of rules or
regulations. An underpayment is defined as follows:
SEC. 6664(a) Underpayment.--For purposes of this
part, the term “underpayment” means the amount by which
any tax imposed by this title exceeds the excess of--
(1) the sum of--
(A) the amount shown as the tax by the
taxpayer on his return, plus
(B) amounts not so shown previously assessed
(or collected without assessment), over
(2) the amount of rebates made.
For purposes of paragraph (2), the term “rebate” means
so much of an abatement, credit, refund, or other
repayment, as was made on the ground that tax imposed
was less than the excess of the amount specified in
paragraph (1) over the rebates previously made.
2The deficiencies must be reduced to reflect our holding
that respondent was in error in (1) his increases to petitioner’s
income tax in 1996 and 1997 due to the change of filing status
and disallowance of deductions, and (2) his failure to subtract
the amounts of self-employment income taxes from the deficiencies
in 1995, 1996, and 1997.
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