InterTAN, Inc. - Page 21

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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).                                              
               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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