- 16 - D. Whether Petitioner Is Liable for the Accuracy-Related Penalty under Section 6662(a) Respondent determined and contends that petitioner is liable for the accuracy-related penalty for substantial understatement of income tax for 1993 and 1994 under section 6662(a). Petitioner contends that respondent is estopped from asserting the accuracy-related penalty under section 6662(a) because respondent conceded at trial that negligence is not an issue in this case. We disagree. Respondent contends that the accuracy-related penalty applies because there is a substantial understatement of tax, not because of negligence. See sec. 6662(b)(2). Section 6662(b)(2) imposes a 20-percent penalty on the portion of an underpayment attributable to a substantial understatement. A substantial understatement exists if, for any taxable year, the amount of the understatement exceeds the greater of 10 percent of the tax required to be shown on the return for the taxable year, or $5,000. See sec. 6662(d)(1)(A). If the taxpayer has substantial authority for his or her tax treatment of any item on the return, the understatement is reduced accordingly. See sec. 6662(d)(2)(B)(i). Petitioner cited no authority for his position that he may carry forward net operating losses from 1991 and 1993 to 1994 when he made no election under section 172(b)(3) and when he did not establish that he had losses that he could carry forward from 1991 and 1993Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011