- 19 -
that there was, we continue with our discussion of the accuracy-
related penalty.
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). Further, no
penalty shall be imposed if it is shown that there was a
reasonable cause for the underpayment and the taxpayer acted in
good faith with respect to the underpayment. Sec. 6664(c)(1).
Petitioner makes 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
us, we also conclude that petitioner failed to establish that
there was reasonable cause for any portion of the understatements
in this case or that she acted with the requisite good faith.
Accordingly, we hold that petitioner is liable for accuracy-
related penalties for 1996 and 1997 to the extent that the Rule
155 computation demonstrates an underpayment of tax in each of
those years.
Reviewed and adopted as the report of the Small Tax Case
Division.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011