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Accuracy-Related Penalties
With respect to the Bensons,69 respondent determined that to
the extent we do not find fraud, we should impose accuracy-
related penalties.70 Additionally, respondent determined
accuracy-related penalties for Eric, Brad, and Mark for 1994.
Respondent based his determinations on negligence or disregard of
the tax rules and regulations and/or a substantial understatement
of income tax. Respondent’s determinations are presumed correct,
and the burden lies with petitioners to demonstrate that
respondent’s penalty determinations were in error.71 Rule
142(a).
Section 6662(a) imposes a 20-percent penalty on the portion
of an underpayment of tax attributable to, inter alia, negligence
and/or a substantial understatement of income tax. Sec. 6662(a)
and (b). “Underpayment” is defined as the amount by which any
tax imposed exceeds the excess of the sum of the amount shown by
the taxpayer on his return plus the amounts not so shown
69Respondent also determined, as an alternate to the fraud
penalty which he conceded shall not apply to Eric, an accuracy-
related penalty for Eric’s 1993 tax year. See docket No. 585-98.
However, on brief, respondent explains that the penalty is
affected by our holding on the issue of constructive dividends.
70In fact, respondent’s alternative position for 1989, 1990,
1993, and 1994 is based upon sec. 6662(a).
71Sec. 7491(c) does not apply in this case. See supra note
41.
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