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784 F.2d 1006, 1009 (9th Cir. 1986). We shall not painstakingly
address petitioners’ assertions “with somber reasoning and
copious citation of precedent; to do so might suggest that these
arguments have some colorable merit.” Crain v. Commissioner, 737
F.2d 1417, 1417 (5th Cir. 1984).
III. Penalty and Addition to Tax
Respondent has the burden of production under section
7491(c) for the addition to tax and the penalty and must come
forward with sufficient evidence showing that they are
appropriate. See Higbee v. Commissioner, 116 T.C. 438, 446-447
(2001). Once respondent has done so, the burden of proof is upon
petitioners to establish reasonable cause and good faith. Id. at
449.
A. Section 6662(a) Accuracy-Related Penalty
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent on the portion of an underpayment of tax
(1) attributable to a substantial understatement of tax or (2)
due to negligence or disregard of rules or regulations. Sec.
6662(b). The term “understatement” means the excess of the
amount of tax required to be shown on a return over the amount of
tax imposed which is shown on the return, reduced by any rebate
(within the meaning of section 6211(b)(2)). Sec. 6662(d)(2)(A).
An understatement is a “substantial understatement” when the
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