Elliot Virgil Wilkerson - Page 18

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          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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