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rebate. Sec. 6662(d)(2). Under section 6662(d)(1), the
understatement is substantial if the amount of the understatement
exceeds the greater of (1) 10 percent of the tax required to be
shown on the return or (2) $5,000.
Here, petitioners received $65,210 of income from RPT PRN
LLC. They reported, however, only $18,814 of income received
from RPT PRN LLC in their tax return. Petitioners’ tax return
showed $13,176 as tax due, while the actual tax due was $26,948.
Petitioners failed to raise any non-partnership-level issues
as to the deficiency, and they have failed to raise any other
defenses in order to avoid the accuracy-related penalty under
section 6662(a). See secs. 6662(d)(2)(B), 6664(c)(1); sec.
1.6664-4(b)(1), (c)(1)(i), (e)(1), Income Tax Regs. It follows
that petitioners had a substantial understatement of tax.
Therefore, we hold that petitioners are liable for the accuracy-
related penalty of $2,754.40 under section 6662(d).
We have considered all arguments made by the parties and
have found those arguments not discussed herein to be irrelevant
and/or without merit. To reflect the foregoing,
An appropriate order and
decision will be entered for
respondent.
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