Lucian T. Baldwin, III - Page 55




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          III. BCC Issues                                                             
               Respondent disallowed lodging and travel deductions in the             
          amounts of $9,658, $59,174, and $50,651 that BCC claimed on its             
          1990, 1991, and 1992 returns, respectively.  Respondent alleged             
          that the deductions were not allowed because they did not meet              
          the requirements of sections 162 and 274.                                   
               Petitioner did not address the BCC adjustments in either his           
          opening brief or his reply brief.  Consequently, we deem                    
          petitioner to have conceded the adjustments to BCC’s lodging and            
          travel deductions.  See Petzoldt v. Commissioner, 92 T.C. 661,              
          683 (1989); Money v. Commissioner, 89 T.C. 46, 48 (1987).                   
          IV. Penalties and Additions to Tax                                          
               A.   Sec. 6661(a) Addition to Tax                                      
               For 1988, respondent determined petitioners are liable for             
          the substantial understatement addition to tax under section                
          6661.  Section 6661(a) imposes an addition to tax in an amount              
          equal to 25 percent of any underpayment attributable to such                
          substantial understatement.  A substantial understatement exists            
          when the amount of tax required to be shown on a taxpayer’s                 
          return exceeds the amount shown on the return by the greater of             
          $5,000 or 10 percent of the amount of tax required to be shown on           
          the return.  Sec. 6661; Schirmer v. Commissioner, 89 T.C. 277,              
          282 (1987).                                                                 








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