Glory Allen - Page 9

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               Under section 6662, among other things, a 20-percent                   
          accuracy-related penalty is to be added to the portion of an                
          underpayment of tax attributable to a substantial understatement            
          of income tax.                                                              
               A substantial understatement of income tax and of self-                
          employment tax is defined as an understatement constituting the             
          greater of 10 percent of the tax required to be shown on a                  
          Federal income tax return or $5,000.  Sec. 6662(d)(1)(A).  An               
          understatement may be reduced by that portion of the                        
          understatement which is attributable to:  (1) Substantial                   
          authority for the claimed tax treatment of the item; (2) adequate           
          disclosure combined with a reasonable basis for the claimed tax             
          treatment of the item; or (3) reasonable cause and good faith               
          with regard to the unpaid tax.  Secs. 6662(d)(2)(B), 6664(c)(1).            
               Under section 7491(c), respondent has the burden of                    
          production with respect to a section 6662 accuracy-related                  
          penalty.  Once respondent meets that burden of production,                  
          however, the taxpayer continues to have the burden of proof with            
          regard to whether respondent’s determination of the penalty is              
          correct.  Rule 142(a); Higbee v. Commissioner, 116 T.C. 438, 446            
               By establishing the taxability of the $57,845 petitioner               
          received from the tribe in 2001 and as to the self-employment tax           
          due on the $33,295 that petitioner received for her work as                 

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