- 9 - B. Section 6662(a)9 The last issue for decision is whether petitioners are liable for an accuracy-related penalty pursuant to section 6662(a) for the year in issue. As relevant herein, section 6662(a) imposes a penalty equal to 20-percent of any underpayment of tax that is due to a substantial understatement of income. See sec. 6662(a) and (b)(2). An individual substantially understates his or her income tax when the reported tax is understated by the greater of 10-percent of the tax required to be shown on the return or $5,000. Sec. 6662(d)(1)(A). Tax is not understated to the extent that the treatment of the item related thereto is based on substantial authority or is adequately disclosed in the return or in a statement attached to the return and there is a reasonable basis for the tax treatment of such item by the taxpayer. Sec. 6662(d)(2)(B). In addition, 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)(1). Petitioners make no argument with regard to substantial authority or adequate disclosure, and we think that no such argument can be persuasively made. Based on the record before 9 Respondent has satisfied his burden of production under sec. 7491(c) with respect to the accuracy-related penalty under sec. 6662(a) and (b)(1). Sec. 7491(c); Rule 142(a); Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011