Richard A. Brunsman - Page 4

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          While we are willing to assume that petitioner sold some assets             
          to Czarnowski, petitioner failed to provide any information                 
          concerning the identity of the assets, the bases of the assets,             
          or when they were purchased.  Without this information, we can              
          only find that the entire amount received constituted taxable               
          income to him.  Respondent is sustained on this issue.                      
          Accuracy-Related Penalty                                                    
               Section 6662 imposes an accuracy-related penalty “equal to             
          20 percent of the portion of the underpayment” of tax                       
          attributable to “Any substantial understatement of income tax.”             
          Sec. 6662(a) and (b)(2).  A substantial understatement of income            
          tax exists if the amount of the understatement for the taxable              
          year exceeds the greater of 10 percent of the tax required to be            
          shown on the return for the taxable year, or $5,000.  Sec.                  
               A taxpayer is relieved of the accuracy-related penalty “if             
          it is shown that there was a reasonable cause * * * and that the            
          taxpayer acted in good faith”.  Sec. 6664(c)(1).5  Whether the              
          taxpayer acted with reasonable cause and in good faith is                   
          determined by the relevant facts and circumstances, and, most               

               4   It is unclear whether, after respondent’s concessions, a           
          substantial understatement of income remains.  We leave this                
          issue for resolution in the Rule 155 computations.                          
               5   Respondent has satisfied his burden of production under            
          sec. 7491(c).                                                               

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