Rene D. and Rosemary S. Valdes - Page 7

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          (1954).  Finally, we are struck by petitioner’s inability to tell           
          the same story twice.  All of these considerations lead us to               
          conclude that petitioner’s allegations have more mendacity than             
          truthfulness.6   We sustain respondent’s determinations as to the           
          unreported income.                                                          
          Accuracy-Related Penalties                                                  
               Section 6662 imposes an accuracy-related penalty “equal to             
          20 percent of the portion of the underpayment” of tax                       
          attributable to “Any substantial understatement of income tax”.             
          Sec. 6662(a) and (b)(2).  A substantial understatement of income            
          tax exists if the amount of the understatement for the taxable              
          year exceeds the greater of 10 percent of the tax required to be            
          shown on the return for the taxable year or $5,000.  Sec.                   
               However, “No penalty shall be imposed * * * if it is shown             
          that there was a reasonable cause * * * and that the taxpayer               
          acted in good faith”.  Sec. 6664(c).  Petitioner failed to                  
          address the accuracy-related penalties at trial and offered no              

          petitioner’s mother received $4,881 from two sales of stock in              
          1997.  There is no evidence to indicate that petitioner received            
          these proceeds.  His aunt did not file tax returns for 1995 and             
          1996, and respondent’s summary of records indicates that she                
          received total income of $13,075 in 1995 and $10,635 for 1996.              
               6  Given the lack of records and the lack of credibility in            
          petitioner’s testimony, sec. 7491(a), pertaining to shifting the            
          burden of proof, has no application here.                                   

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