- 5 -
1999 joint return was $21,891,5 and not the $1,892 that petition-
ers reported in that schedule. Respondent also determined in the
notice that petitioners are liable for the year at issue for the
accuracy-related penalty under section 6662(a) because of a
substantial understatement of tax under section 6662(b)(2).
OPINION
The only issue remaining for our consideration is whether
petitioners are liable for the accuracy-related penalty under
section 6662(a). Pursuant to section 7491(c), respondent bears
the burden of production with respect to that issue.6 In order
to meet respondent’s burden of production, respondent must come
forward with sufficient evidence indicating that it is appropri-
ate to impose the accuracy-related penalty in this case.7 Higbee
5Respondent rounded down to the nearest dollar the
$21,891.95 of nonemployee compensation that Windermere reported
in Form 1099 issued to Mr. Larson for 1999.
6With respect to court proceedings arising in connection
with examinations commencing after July 22, 1998, under sec.
7491(c) respondent bears the burden of production with respect to
an individual’s liability for any penalty or addition to tax.
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(c), 112 Stat. 727. In any case in
which there is no examination, sec. 7491(c) applies to court
proceedings arising in connection with taxable periods or events
beginning or occurring after July 22, 1998. Id. It is reason-
able to assume that any examination of petitioners’ taxable year
1999 must have occurred sometime after petitioners filed their
1999 joint return (i.e., sometime on or after Apr. 16, 2000).
Moreover, the only taxable period at issue in this case is 1999.
7Although respondent bears the burden of production with
respect to the accuracy-related penalty at issue, respondent
“need not introduce evidence regarding reasonable cause, substan-
(continued...)
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