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of the tax shown on the individual’s return for that year (or, if
no return is filed, 90 percent of the individual’s tax for such
year), or (2) if the individual filed a return for the
immediately preceding taxable year, 100 percent of the tax shown
on that return. Sec. 6654(d)(1)(A) and (B). There are two
mechanical exceptions to the applicability of the section 6654(a)
addition to tax. First, as relevant to this case, the addition
is not applicable if the tax shown on the individual’s return for
the year in question (or, if no return is filed, the individual’s
tax for that year) is less than $500. Sec. 6654(e)(1). Second,
the addition is not applicable if the individual’s tax liability
for the preceding taxable year was zero. Sec. 6654(e)(2).
Respondent’s determination that petitioner underpaid his
estimated taxes is based on petitioner’s tax liability as
determined in the statutory notice of deficiency. This
determination is correct with respect to taxable year 1990
because petitioner did not file a return for taxable year 1989 or
1990. Sec. 6654(d)(1)(B). However, this determination is
incorrect with respect to taxable year 1989. Petitioner and his
wife filed a joint Federal income tax return for taxable year
1988 which reflected gross income of $2,068 and a tax liability
of zero. Thus, because 100 percent of petitioner’s 1988 tax
liability as shown on his filed return was zero, petitioner was
not required to make estimated tax payments for 1989. Sec.
6654(d)(1)(B)(ii).
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Last modified: May 25, 2011