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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.
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Last modified: May 25, 2011