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Accuracy-Related Penalty Under Section 6662(a)
Respondent determined that petitioners are liable for each
year at issue for the accuracy-related penalty under section
6662(a) because of: (1) A substantial understatement of income
tax under section 6662(b)(2) and (2) alternatively, negligence
under section 6662(b)(1).
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the underpayment of tax resulting from, inter alia,
a substantial understatement of income tax, sec. 6662(b)(2), or
negligence or disregard of rules or regulations, sec. 6662(b)(1).
For purposes of section 6662(a), an understatement is equal to
the excess of the amount of tax required to be shown in the tax
return over the amount of tax shown in the tax return, sec.
6662(d)(2)(A), and is substantial in the case of an individual if
it exceeds the greater of 10 percent of the tax required to be
shown or $5,000, sec. 6662(d)(1)(A). For purposes of section
6662(a), the term “negligence” includes any failure to make a
reasonable attempt to comply with the Code, and the term “disre-
gard” includes any careless, reckless, or intentional disregard.
Sec. 6662(c). Negligence has also been defined as a lack of due
care or failure to do what a reasonable person would do under the
circumstances. Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th
Cir. 1992), affg. T.C. Memo. 1991-179; Antonides v. Commissioner,
91 T.C. 686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990).
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