- 8 -
Memo. 1969-159; Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
We are not required to accept the self-serving statements of
petitioner as the truth.
On this record, we hold that petitioner had unreported items
of gross income in the taxable year 1996 as determined by
respondent. Accordingly, we sustain respondent’s determination
of petitioner’s income tax deficiency with respect to the 1996
taxable year.
Finally, we must decide whether petitioner is liable for the
section 6662(a) accuracy-related penalty for the 1996 taxable
year. Taxpayers are liable for an accuracy-related penalty in
the amount of 20 percent of the portion of an underpayment of tax
attributable to any substantial understatement of income tax.
Sec. 6662(a) and (b)(2). A “substantial understatement” is an
understatement for the taxable year exceeding the greater of 10
percent of the proper tax or $5,000. Sec. 6662(d)(1)(A). No
penalty will be imposed with respect to any portion of any
underpayment if it is shown that there was a reasonable cause for
such portion and that the taxpayer acted in good faith with
respect to such portion. Sec. 6664(c). This determination is
based on all the facts and circumstances. Sec. 1.6664-4(b)(1),
Income Tax Regs.
As mentioned, section 7491(c) imposes on respondent the
burden of production of evidence that the section 6662(a) penalty
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011