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be shown on the return over the tax actually shown on the return,
and is considered substantial if it exceeds the greater of 10
percent of the tax owing or $5,000. Sec. 6661(b)(1)(A) and
6661(b)(2)(B). Where the taxpayer shows that he or she had a
reasonable cause for, and that he or she acted in good faith with
respect to, the underpayment, the Secretary may waive the section
6661 additions. Sec. 6661(c). It is taxpayers, however, who
bear the burden of proving that Commissioner erred in imposing
the addition to tax under section 6661. Rule 142(a)(1).
On their joint Federal income tax return for 1988
petitioners reported a tax due of $1,939. Because petitioners
failed to report more than $500,000 in income, the threshold of
section 6661(a) is clearly met. Petitioners have offered no
evidence or argument that they are not liable for the addition to
tax under section 6661(a). Accordingly, we sustain respondent’s
determination that petitioners are liable for the addition to tax
under section 6661(a) for the substantial understatement of
income tax.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011