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due.7 Accordingly, we conclude that respondent has produced
sufficient evidence to show that the section 6651(a)(1) addition
to tax is appropriate, unless petitioners prove that their
failure to file was due to reasonable cause.
Petitioners have not provided any evidence indicating that
their failure to file was due to reasonable cause. Therefore, an
addition to tax of 25 percent of the amount required to be shown
as tax on the return is sustained in the instant case. Because
the parties have made several concessions, respondent’s original
section 6651(a)(1) addition to tax computation must be adjusted
to reflect such changes. As a final matter, we note that there
is a discrepancy in the record with regard to petitioners’ amount
of withholding.8 See sec. 6651(b)(1) (providing that the amount
required to be shown as tax on the return for purposes of the
section 6651(a)(1) addition to tax shall be reduced for timely
payments or credits allowed to be claimed on the return). The
parties are asked to consider this discrepancy in their Rule 155
computations.
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent on the portion of an underpayment of tax
(1) attributable to a substantial understatement of tax or (2)
7 In addition, the 1996 tax return, which is part of the
record, reflects that it was not timely filed.
8 Petitioners claimed withholding of $154.46 on their 1996
tax return. It appears that respondent did not give credit for
such withholding in the notice of deficiency.
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