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the foreign tax credits which petitioner claimed with respect to
the $20 million dividend that it reported it received from ITC
and that that understatement is substantial within the meaning of
section 6662(d)(1)(A) and (B).
OPINION
Petitioner bears the burden of proving that the determina-
tion in the notice is erroneous.14 See Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the tax resulting from a substantial understatement
of income tax. An understatement is equal to the excess of the
amount of tax required to be shown in the tax return over the
amount of tax shown in such return, see sec. 6662(d)(2)(A), and
is substantial in the case of a corporation if the amount of the
understatement for the taxable year exceeds the greater of 10
percent of the tax required to be shown in the tax return for
that year or $10,000, see sec. 6662(d)(1)(A) and (B).
The amount of the understatement may be reduced to the
extent that it is attributable to, inter alia, the tax treatment
of an item for which there is or was substantial authority. See
sec. 6662(d)(2)(B)(i). The substantial authority standard is an
objective standard involving an analysis of the law and the
14Respondent’s examination of the year at issue began before
July 23, 1998. We conclude that sec. 7491(c) is not applicable
in the instant case.
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