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demonstrated that no genuine issue exists as to any material fact
and a decision may be rendered as a matter of law. Rule 121(b);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.
17 F.3d 965 (7th Cir. 1994).
We conclude that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law.
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent on the portion of an underpayment of tax
due to negligence or disregard of rules or regulations or a
substantial understatement of income tax. Sec. 6662(b). An
“understatement” is the difference between the amount of tax
required to be shown on the return and the amount of tax actually
shown on the return. Sec. 6662(d)(2)(A). A “substantial
understatement” exists if the understatement exceeds the greater
of (1) 10 percent of the tax required to be shown on the return
for a taxable year, or (2) $5,000. Sec. 6662(d)(1). The
understatement is reduced to the extent that the taxpayer (1) has
adequately disclosed facts affecting the tax treatment of an item
and there is a reasonable basis for such treatment, or (2) has
substantial authority for the tax treatment of an item. Sec.
6662(d)(2)(B).
Section 6664(c)(1) provides that no accuracy-related penalty
shall be imposed with respect to any portion of an underpayment
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