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analysis of the issue for the parties’ consideration, and we
shall enter decision under Rule 155.
In pertinent part, section 6654(a) provides:
in the case of any underpayment of estimated tax by an
individual, there shall be added to the tax * * * an amount
determined by applying--
(1) the underpayment rate established under section
6621,
(2) to the amount of the underpayment,
(3) for the period of the underpayment.
The amount of the underpayment is the excess of the required
payment over the amount of the installment paid. See sec.
6654(b)(1). The amount of the required payment is 25 percent of
the required annual payment. See sec. 6654(d)(1)(A). The
required annual payment is the lesser of (1) 90 percent of the
tax shown on the return for the taxable year, or (2) 100 percent
of the tax shown on the return for the preceding year. See sec.
6654(d)(1)(B).
Respondent’s determination that petitioner underpaid her
estimated taxes is based on petitioner’s tax liability as
determined in the notice. Respondent uses an incorrect basis for
determining whether petitioner underpaid her estimated taxes.
Petitioner’s estimated tax liability is based on her tax
liability as stated on her original tax returns, and not on the
notice of deficiency or her ultimate tax liability. See Gleason
v. Commissioner, T.C. Memo. 1990-110; Warda v. Commissioner, T.C.
Memo. 1988-572; Sampson v. Commissioner, T.C. Memo. 1986-231.
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