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petitioners have not shown that they met the tests of reasonable
cause and good faith.
Petitioners have failed to prove that they had substantial
authority for their treatment of the partnership loss and that
they adequately disclosed the relevant facts of that treatment.
The understatement upon which the addition to tax was imposed was
$20,933. The understatement is substantial because it exceeds
the greater of $5,000 or 10 percent of the amount required to be
shown on the return.13 On this record, the Court holds that
petitioners are liable for the addition to tax under section
6661(a) for a substantial understatement of tax for 1982.
Respondent is sustained on this issue.
Finally, to the extent the Court has failed to address an
argument of petitioners herein, the Court concludes such argument
is without merit.
Decision will be entered
for respondent.
13 The amount required to be shown on the return was
$69,852, 10 percent of which equals $6,985.20.
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