James E. Hendricks and Roberta J. Hendricks - Page 9




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          We do not consider that settlement here.  See Fed. R. Evid. 408.            
          Petitioners also contend that they have paid more tax than their            
          coworkers, that respondent unreasonably refused to settle this              
          case, and that respondent has harassed them.  Petitioners state             
          no details to support these claims, and we do not consider them             
          further.                                                                    
               4.   Conclusion                                                        
               We conclude that petitioners must include in income the                
          $69,500 that petitioner withdrew from his IRA in 1996.                      
          B.   Whether Petitioners Are Liable for the Accuracy-Related                
               Penalty                                                                
               Respondent concedes that respondent bears the burden of                
          production relating to petitioners’ liability under section                 
          6662(a).  Sec. 7491(c).  The Commissioner satisfies the burden of           
          production with respect to the accuracy-related penalty under               
          section 6662 by coming forward with sufficient evidence                     
          indicating that it is appropriate to impose the relevant penalty;           
          the Commissioner need not introduce evidence regarding reasonable           
          cause, substantial authority, or similar provisions.  Higbee v.             
          Commissioner, 116 T.C. 438, 446 (2001); see H. Conf. Rept. 105-             
          599, at 241 (1998), 1998-3 C.B. 747, 995.                                   
               A substantial understatement of tax exists if the amount of            
          the understatement is more than 10 percent of the correct amount            
          of tax or $5,000.  Sec. 6662(d)(1)(A).  Petitioners reported tax            







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