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deficiency, petitioners Cox did not introduce any evidence to
show they made a reasonable effort to comply with the provisions
of the Internal Revenue Code or to determine the correctness of
their reporting positions, or that they had reasonable cause for
their respective underpayments.
Because petitioners Cox failed to prove that the proposed
deficiencies were not attributable to negligence or disregard of
rules or regulations, and because they did not assert any other
basis for obtaining relief from the section 6662(a) penalty, we
sustain respondent’s determinations that petitioners Cox are
liable for the section 6662(a) penalty to the extent that the
Rule 155 computations show they are liable for underpayments.
B. Accuracy-Related Penalty for Substantial Understatement
of Tax
Respondent determined that Deborah and her spouse
(petitioners Burke) were liable for an accuracy-related penalty
under section 6662(a) and (b)(2) for 1995 because the
underpayment of tax was due to a substantial understatement of
income tax. Petitioners Burke contend that they are not liable
for the penalty.
Section 6662(a) and (b)(2) imposes a penalty equal to 20
percent of the portion of an underpayment attributable to any
substantial understatement of tax. A substantial understatement
occurs when the amount of the understatement exceeds the greater
of 10 percent of the amount of tax required to be shown on the
return or $5,000 ($10,000 for corporations). Sec. 6662(d)(1).
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