- 17 -
was sustained during the taxable years 1997 and 1998 rather than
the taxable year 2000, which is the year in issue.
Accordingly, we hold that petitioner is not entitled to a
casualty or theft loss deduction of $7,283.
D. Section 6662(a) Substantial Understatement of Tax
The last issue for decision is whether petitioner is liable
for an accuracy-related penalty pursuant to section 6662(a) for
the year in issue. Section 7491(c) places on the Commissioner
the burden of production with respect to a taxpayer’s liability
for any penalty.8 The taxpayer, however, still has the burden of
proving that the Commissioner’s determination of the accuracy-
related penalty is erroneous. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. at 84; Welch v. Helvering, 290 U.S. 111,
115 (1933); Higbee v. Commissioner, 116 T.C. 438, 446-448 (2001).
Section 6662(a) imposes a penalty equal to 20 percent of any
underpayment of tax that is due to a substantial understatement
of income tax. See sec. 6662(a) and (b)(2). An individual
substantially understates his or her income tax when the reported
tax is understated by the greater of 10 percent of the tax
required to be shown on the return or $5,000. Sec.
8 We hold that respondent satisfied the burden of
production under sec. 7491(a)(1) because the record shows that
petitioner failed to include certain items in income and claimed
deductions to which he was not entitled. Higbee v. Commissioner,
116 T.C. 438, 442 (2001).
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