- 8 - 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. 6662(d)(1)(A). However, “No penalty shall be imposed * * * if it is shown that there was a reasonable cause * * * and that the taxpayer acted in good faith”. Sec. 6664(c). Petitioner failed to address the accuracy-related penalty at trial and offered no evidence that she had reasonable cause for the understatement or acted in good faith. Accordingly, we sustain respondent’s determination. Reviewed and adopted as the report of the Small Tax Case Division. To reflect the foregoing, Decision will be entered for respondent.Page: Previous 1 2 3 4 5 6 7 8 9
Last modified: May 25, 2011