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6229(a), (d). Once this Court has jurisdiction pursuant to a
timely issued notice of deficiency, our jurisdiction allows us to
redetermine the correct amount of the deficiency and any
additions to tax--even in an amount greater than that determined
in the notice of deficiency--so long as the Secretary asserts a
claim for the increase at or before the hearing of the case.
Secs. 6213(a), 6214(a). Because respondent asserted a claim for
the increased amount of the section 6661(a) addition to tax prior
to trial, this Court has jurisdiction to redetermine the correct
amount thereof. Sec. 6214(a).
Section 6661(a), 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 for the taxable year. 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 reduced by the portion of the understatement
which the taxpayer shows is attributable to either (1) the tax
treatment of any item for which there was substantial authority,
or (2) the tax treatment of any item with respect to which the
relevant facts were adequately disclosed on the return. Sec.
6661(b)(2)(B). If an understatement is attributable to a tax
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