- 29 -
additional interest element for negligence under sections
6653(a), 6653(a)(1) and (2). [Id. at 178.]
None of the circumstances that were determinative in Krause
v. Commissioner, supra, are present in the instant case.
Petitioners’ reliance on the cited case is misplaced.
In view of the foregoing, we hold that petitioners are liable
for the additions to tax under section 6653(a)(1) and (2) for
negligence. Respondent’s determination is sustained.
II. Section 6661(a) Substantial Understatement of Tax Liability
The second issue for decision is whether petitioners are
liable for an addition to tax under section 6661(a). That
section, as amended by the Omnibus Budget Reconciliation Act of
1986, Pub. L. 99-509, sec. 8002, 100 Stat. 1951, provides for an
addition to tax of 25 percent of the amount of any underpayment
attributable to a substantial understatement of income tax.
Petitioners bear the burden of proving that they are not liable
for the addition to tax. Monahan v. Commissioner, 109 T.C. 235,
257 (1997); Kellen v. Commissioner, T.C. Memo. 2002-19; Mueller v.
Commissioner, T.C. Memo. 2001-178.21
A substantial understatement of income tax exists if the
amount of the understatement exceeds the greater of 10 percent of
the tax required to be shown on the return, or $5,000. Sec.
6661(b)(1)(A). Generally, the amount of an understatement is
21 See supra note 13.
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