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do what a reasonable and ordinarily prudent person would do under
the circumstances.’” Neely v. Commissioner, 85 T.C. 934, 947
(1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th
Cir. 1967), affg. in part and remanding in part on another issue
43 T.C. 168 (1964) and T.C. Memo. 1964-299). A “substantial
understatement” exists where the amount of the understatement
exceeds the greater of 10 percent of the tax required to be shown
on the return for the taxable year or $5,000. Sec. 6662(d)(1).
No penalty shall be imposed if it is shown that there was
reasonable cause for the underpayment and the taxpayer acted in
good faith with respect to the underpayment. Sec. 6664(c).
Petitioner failed to address the accuracy-related penalty
and offered no evidence that he had reasonable cause for the
underpayment. Accordingly, we sustain respondent’s
determination.
We have considered all arguments made by the parties, and,
to the extent not discussed above, conclude they are irrelevant
or without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011