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interest. Upon a review of the facts in the record, we conclude
that petitioner did not engage in activities as a tutor and as an
editor with an actual and honest objective of making a profit.
We hold that under section 183 petitioner is not entitled to the
claimed Schedules C deductions in issue and we sustain
respondent’s determinations.
Section 6662(a) imposes a penalty in an amount equal to 20
percent of the portion of any underpayment of tax attributable to
causes specified in subsection (b). Subsection (b) of section
6662 provides that among the causes justifying imposition of the
penalty is any substantial understatement of tax. An
understatement is equal to the excess of the amount of tax
required to be shown on the return over the amount of tax shown
on the return. Sec. 6662(d)(2)(A). In the case of an
individual, an understatement is substantial if it exceeds the
greater of 10 percent of the tax required to be shown on the
return or $5,000. Sec. 6662(d)(1)(A).
An understatement is reduced to the extent attributable to
an item: (1) For which there existed substantial authority for
the taxpayer’s treatment thereof, or (2) with respect to which
relevant facts were adequately disclosed in the return or in a
statement attached thereto and there existed a reasonable basis
for the taxpayer's treatment of the item. Sec. 6662(d)(2)(B).
The accuracy-related penalty under section 6662(a) does not
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