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audit year (in this case, zero) was equal to 25 percent of the
lesser of (1) 90 percent of the tax shown on his return for that
year or, alternatively, (2) 100 percent of the tax shown on his
return for the prior year, 1987.
2. Satisfaction of Section 6654(d)(1)(B)(i)
The 1988 return, filed on or about May 14, 1997, shows a
zero tax liability for that year. If the 1988 return constitutes
a valid return for purposes of section 6654(d)(1)(B)(i), there
can be no underpayment of a required installment of estimated tax
since there are no required installments due when there is no tax
liability shown on the return as filed; i.e., 25 percent of zero
equals zero.
We have repeatedly held that a taxpayer’s estimated tax
liability is based upon the taxpayer’s tax liability as stated on
the original tax return as filed, and not upon the notice of
deficiency amount or the ultimate tax liability (here, one and
the same and referred to, for convenience, as the ultimate tax
liability). See Gleason v. Commissioner, T.C. Memo. 1990-110;
Warda v. Commissioner, T.C. Memo. 1988-572; Sampson v.
Commissioner, T.C. Memo. 1986-231; see also Weir v. Commissioner,
T.C. Memo. 2001-184. Moreover, the sufficiency of estimated tax
payments has been determined with respect to the tax liability
shown on the taxpayer’s return for the preceding taxable year
pursuant to section 6654(d)(1)(B)(ii), rather than with respect
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