Thomas J. Rosser - Page 16




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          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 1993           





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