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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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