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to 1994. We conclude that the exception under section
6662(d)(2)(B)(i) does not apply.
The amount of the understatement is reduced for any item
that is adequately disclosed in the taxpayer’s return, or in a
statement attached to the return, if there is reasonable basis
for the taxpayer’s treatment of the item. See sec.
6662(d)(2)(B)(ii). The mere claiming of a deduction is not
disclosure for purposes of section 6662(d)(2)(B)(ii)(I). See
Accardo v. Commissioner, 942 F.2d 444, 453 (7th Cir. 1991)
(taxpayer's statement that his deduction of $207,000 was for
"Legal fees re conservation of property held for production of
income" is not disclosure for purposes of section
6662(b)(2)(B)(ii)(I)), affg. 94 T.C. 96 (1990); Schirmer v.
Commissioner, 89 T.C. 277, 285-286 (1987) (mere reporting of
income and deductions does not constitute disclosure of relevant
facts). Here, deducting net operating losses carried forward
from 1991 and 1993 to 1994 is not adequate disclosure under
section 6662(d)(2)(B)(ii)(I). Thus, petitioner did not
adequately disclose the nature of the net operating loss
carryforward controversy for purposes of section
6662(d)(2)(B)(ii)(I).
We conclude that petitioner is liable for the accuracy-
related penalty under section 6662(a) for any part of the
underpayment for 1993 and 1994 to the extent the underpayment in
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