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Section 6662(a) provides for an accuracy-related penalty
(the accuracy-related penalty) in the amount of 20 percent of the
portion of any underpayment attributable to, among other things,
negligence or intentional disregard of rules or regulations
(without distinction, negligence), any substantial understatement
of income tax, or any substantial valuation misstatement.
Respondent determined the accuracy-related penalty against
petitioners. Although the notice states that respondent bases
his imposition of the section 6662(a) accuracy-related penalty
upon “one or more” of the three grounds listed in section
6662(b)(1) through (3), on brief, respondent relies only on his
claims that petitioners were negligent or substantially
understated their income tax.
Respondent bears the burden of production with respect to
all penalties. See sec. 7491(c). The burden imposed by section
7491(c) is only to come forward with evidence regarding the
appropriateness of applying a particular addition to tax or
penalty to the taxpayer. Respondent need not negate all defenses
to the additions or penalties. See Higbee v. Commissioner, 116
T.C. 438, 446 (2001). Respondent has met his burden with respect
to his claim of negligence by establishing that petitioners, in
understating their income, were negligent and disregarded rules
or regulations. Further, the deficiency we have redetermined for
each year indicates a substantial understatement of income. See
sec. 6662(d). In the petition, petitioners aver that they acted
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