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Section 7491(c) imposes on respondent the burden of
producing evidence to show that the section 6662(a) penalty is
appropriate, but respondent need not produce evidence regarding
reasonable cause. Higbee v. Commissioner, 116 T.C. 438, 446-447
(2001). The Court has sustained respondent's determination of
the deficiency. Petitioners' understatement of tax exceeds the
greater of 10 percent of the proper tax or $5,000. The Court
finds that respondent has satisfied the burden of production with
respect to the accuracy-related penalty under section 6662(a).
Petitioners presented no evidence indicating reasonable
cause for the understated income. Accordingly, the imposition of
the accuracy-related penalties is sustained.
The Court has considered all of the other arguments made by
the parties, and to the extent that the arguments have not been
specifically discussed above, they have been found to be moot or
without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing.
Decision will be
entered for respondent.
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Last modified: May 25, 2011